Category Archives: economics

Ferguson on the Appeal of Fascism vs. Nazism

From The War of the World: Twentieth-Century Conflict and the Descent of the West, by Niall Ferguson (Penguin Press, 2006), pp. 230-231, 239-240:

Considering the emphasis the new dictatorships laid on their supposedly distinctive nationalistic traditions, they all looked remarkably alike: the coloured shirts [German Brownshirts, Italian Blackshirts, Irish Blueshirts, Romanian Greenshirts], the shiny boots, the martial music, the strutting leaders, the gangster violence. At first sight, then, there was little to distinguish the German version of dictatorship from all the rest – except perhaps that Hitler was marginally more absurd than his counterparts. As late as 1939, Adolf Hitler could still be portrayed by Charlie Chaplin in his film The Great Dictator as an essentially comic figure, bawling incomprehensible speeches, striking preposterous poses and frolicking with a large inflatable globe. Yet there were in reality profound differences between National Socialism and fascism. Nearly all the dictatorships of the inter-war period were at root conservative, if not downright reactionary. The social foundations of their power were what remained of the pre-industrial ancien régime: the monarchy, the aristocracy, the officer corps and the Church, supported to varying degrees by industrialists fearful of socialism and by frivolous intellectuals who were bored of democracy’s messy compromises.* The main function the dictators performed was to crush the Left: to break their strikes, prohibit their parties, deny voice to their voters, arrest and, if it was deemed necessary, kill their leaders. One of the few measures they took that went beyond simple social restoration was to introduce new ‘corporate’ institutions supposed to regiment economic life and protect loyal supporters from the vagaries of the market. In 1924 the French historian Elie Halevy nicely characterized fascist Italy as ‘the land of tyranny … a regime extremely agreeable for travellers, where trains arrive and leave on time, where there is no strike in ports or public transport’. ‘The bourgeois’, he added, ‘are beaming.’ It was, as Renzo De Felice said in his vast and apologetic biography of the Duce, ‘the old regime in a black shirt’….

Contrary to the old claims that it was the party of the countryside, or of the north, or of the middle class, the NSDAP attracted votes right across Germany and right across the social spectrum…. It is true that places with relatively high Nazi votes were more likely to be in central northern and eastern parts, and those with relatively low Nazi votes were more likely to be in the south and west. But the more important point is that the Nazis were able to achieve some electoral success in nearly any kind of local political milieu, covering the German electoral spectrum in a way not seen before or since. The Nazi vote did not vary proportionately with the unemployment rate or the share of workers in the population. As many as two-fifths of the Nazi voters in some districts were working class, to the consternation of the Communist leadership. In response, some local Communists openly made common cause with the Nazis. ‘Oh yes, we admit that we’re in league with the National Socialists,’ said one Communist leader in Saxony. ‘Bolshevism and Fascism share a common goal: the destruction of capitalism and of the Social Democratic Party. To achieve this aim we are justified in using every means.’ It was a mark of Goebbels’ skill in making the party seem all things to all men that, simultaneously, dyed-in-the-wool Prussian Conservatives could regard the Nazis as potential partners in an anti-Marxist coalition. Thus were political rivals lured into what proved to be fatal forms of cooperation. The only significant constraint on the growth of the Nazi vote was the comparatively greater resilience of the Catholic Centre party compared with parties hitherto supported by German Protestants.

Other fascist movements, as we have seen, depended heavily on elite sponsorship to gain power. The Nazis did not need to. For all the attention that has been paid to them, the machinations of the coterie around Hindenburg were not the decisive factor, as those of the Italian elites had been in 1922. If anything, they delayed Hitler’s appointment as Chancellor, an office that was rightfully his after the July 1932 election. It was not the traditional elite of landed property that was drawn to Hitler; the real Junker types found him horribly coarse. (When Hitler shook hands with Hindenburg, one conservative was reminded ‘of a headwaiter closing his hand around the tip’.) Nor was it the business elite, who not unreasonably feared that National Socialism would prove a Trojan horse for socialism proper; nor the military elite, who had every reason to dread subordination to an opinionated Austrian corporal. The key to the strength and dynamism of the Third Reich was Hitler’s appeal to the much more numerous intellectual elite; the men with university degrees who are so vital to the smooth running of a modern state and civil society.

For reasons that may be traced back to the foundation of the Bismarckian Reich or perhaps even further into Prussian history, academically educated Germans were unusually ready to prostrate themselves before a charismatic leader.

(*A list of all the treasonous clerics who flirted or did more than flirt with fascism would be a book in its own right. If only to give an illustration of how widespread the phenomenon was, dishonourable mention may be made of the writer Gabriele D’Annunzio, who established his own tinpot tyranny in post-war Fiume; the poet T. S. Eliot, who wrote that ‘totalitarianism can retain the terms “freedom” and “democracy” and give them its own meaning’; the philosopher Martin Heidegger, who, as Rector of Freiburg University, lent his enthusiastic support to the Nazi regime; the political theorist Carl Schmitt, who devised pseudo-legal justifications for the illegalities of the Third Reich; the novelist Ignazio Silone, who shopped former Communist comrades to the fascists; and the poet W. B. Yeats, who wrote songs for the Irish Blueshirts. Thomas Mann, who had made his fair share of mistakes during the First World War and only with difficulty broke publicly with the Nazi regime, was not wrong when he spoke of ‘the thoroughly guilty stratum of intellectuals’.)

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March 1933: Similar Talk, Different Results

From The War of the World: Twentieth-Century Conflict and the Descent of the West, by Niall Ferguson (Penguin Press, 2006), pp. 221-225:

It was March 1933. The national mood was feverish and yet expectant. In the wake of his sweeping victory, the country’s charismatic new leader addressed people desperate for change. Millions crowded around their radios to hear him. What they heard was a damning indictment of what had gone before and a stirring call for national revival….

The action the new leader had in mind was bold, even revolutionary. Jobs would be created by ‘direct recruiting by the Government itself, treating the task as we would treat the emergency of war’; men would be put to work on ‘greatly needed projects to stimulate and reorganize the use of our natural resources’…. He would introduce a system of ‘national planning for and supervision of all forms of transportation and of communications and other utilities’ and ‘a strict supervision of all banking and credits and investments’ to bring ‘an end to speculation with other people’s money’ – measures that won enthusiastic cheers from his audience….

Not content with this vision of a militarized nation, he concluded with a stark warning to the nation’s newly elected legislature: ‘An unprecedented demand and need for undelayed action may call for temporary departure from … the normal balance of executive and legislative authority.’ If the legislature did not swiftly pass the measures he proposed to deal with the national emergency, he demanded ‘the one remaining instrument to meet the crisis – broad Executive power to wage a war against the emergency, as great as the power that would be given to me if we were in fact invaded by a foreign foe’. This line brought forth the loudest applause of all.

Who was this demagogue who so crudely blamed the Depression on corrupt financiers, who so boldly proposed state intervention as the cure for unemployment, who so brazenly threatened to rule by decree if the legislature did not back him, who so cynically used and re-used the words ‘people’ and ‘Nation’ to stoke up the patriotic sentiments of his audience? The answer is Franklin D. Roosevelt, and the speech from which all the above quotations are taken was his inaugural address as he assumed the American presidency on March 4, 1933.

Less than three weeks later, another election victor in another country that had been struck equally hard by the Depression gave a remarkably similar speech, beginning with a review of the country’s dire economic straits, promising radical reforms, urging legislators to transcend petty party-political thinking and concluding with a stirring call for national unity .The resemblances between Adolf Hitler’s speech to the newly elected Reichstag on March 21, 1933, and Roosevelt’s inaugural address are indeed a great deal more striking than the differences. Yet it almost goes without saying that the United States and Germany took wholly different political directions from 1933 until 1945, the year when, both still in office, Roosevelt and Hitler died. Despite Roosevelt’s threat to override Congress if it stood in his way, and despite his three subsequent re-elections, there were only two minor changes to the US Constitution during his presidency: the time between elections and changes of administration was reduced (Amendment 20) and the prohibition of alcohol was repealed (Amendment 21). The most important political consequence of the New Deal was significantly to strengthen the federal government relative to the individual states; democracy as such was not weakened. Indeed, congress rejected Roosevelt’s Judiciary Reorganization Bill. By contrast, the Weimar Constitution had already begun to decompose two or three years before the 1933 general election, with the increasing reliance of Hitler’s predecessors on emergency presidential decrees. By the end of 1934 it had been reduced to a more or less empty shell. While Roosevelt was always in some measure constrained by the legislature, the courts, the federal states and the electorate, Hitler’s will became absolute, untrammelled even by the need for consistency or written expression. What Hitler decided was done, even if the decision was communicated verbally; when he made no decision, officials were supposed to work towards whatever they thought his will might be. Roosevelt had to fight – and fight hard – three more presidential elections. Democracy in Germany, by contrast, became a sham, with orchestrated plebiscites in place of meaningful elections and a Reichstag stuffed with Nazi lackeys. The basic political freedoms of speech, of assembly, of the press and even of belief and thought were done away with. So, too, was the rule of law. Whole sections of German society , above all the Jews, lost their civil as well as political rights. Property rights were also selectively violated. To be sure, the United States was no utopia in the 1930s, particularly for African-Americans. It was the Southern states whose legal prohibitions on interracial sex and marriage provided the Nazis with templates when they sought to ban relationships between ‘Aryans’ and Jews. Yet, to take the most egregious indicator, the number of lynchings of blacks during the 1930s (119 in all) was just 42 per cent of the number in the 1920s and 21 per cent of the number in the 1910s. Whatever else the Depression did, it did not destroy American democracy, nor worsen American racism.*

(*Roosevelt nevertheless opposed the Costigan-Wagner Anti-Lynching Bill for fear that to support it might cost him the Southern states in the 1936 election.)

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Wordcatcher Tales: Dappokusha/Talbukja

How widespread is the economic downturn across the globe? Well, it’s now affecting many North Koreans, because funds from South Korea that might help them escape their workers’ paradise are not as plentiful as they once were, according to an article in Japan’s Mainichi Shimbun. I’ll quote just the first paragraph from White Peril‘s translation.

The number of dappokusha fleeing from North Korea … has decreased substantially [to] Yanbian Korean Autonomous Prefecture, Jilin Province, China, which abuts the PRC-DPRK border. It’s the biggest stronghold of the refugee business, but the activities of the brokers who maneuver behind the scenes guiding refugees through are at a standstill. This year is the sixtieth anniversary of the establishment of diplomatic relations between the two countries, and in addition to a heightened level of alert at the border, the effects of the financial crisis have stopped the money that gets to them from South Korea. However, the defections supported by the brokers are a “necessary evil.” Beyond the border, there’s a backlog of desperate people.

The term dappokusha 脫北者 (lit. ‘escape North person’) caught my attention. The same compound is read 탈북자 in Korean (talbukja in the official SK romanization), but its usage in SK is now discouraged in favor of the euphemistic 새터민 saeteomin, which I’ll translate here as ‘new localites’.

The agentive sense of 脱 datsu ‘escape, desert, quit’ also shows up in the following compounds.
脱船 dassen (‘quit ship’) ‘jump/desert ship’
脱線 dassen (‘quit line’) ‘jump the (train)track’
脱サラ dassara (‘quit salary’) ‘quit one’s job as a salaryman’

But a similar 脱 datsu, in the agentive or instrumental sense of ‘remove’, occurs in some more common words.
脱水機 dassuiki (‘remove water machine’ =) ‘dryer, dehydrator’
脱脂乳 dasshinyuu (‘remove fat milk’ =) ‘skim milk’
靴脱ぎ kutsunugi (‘shoe removal’ =) ‘place to remove shoes’

Without an agent or instrument, the same kanji translates as ‘missing’.
脱文 datsubun ‘missing passage (of text)’
脱字 datsuji ‘missing word/character (in text)’

HISTORICAL/COMPARATIVE NOTE: One of the more remarkable regular sound correspondences between Sino-Korean and Sino-Japanese is SK *-l and SJ *-t (the latter often -tsu in final position, or assimilated to the following voiceless consonant), as in 出発 : 출발 chulbal : しゅっぱつ shuppatsu (< shutu + hatu) ‘departure’. This sound correspondence is part of what gives Korean its characteristic abundance of rolling liquid sounds and Japanese its characteristic abundance of staccato geminate obstruents amid otherwise open syllables (like Italian).

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From Tight Ethnotowns to Dispersed Ethnoburbs

The latest issue of Southeastern Geographer (on Project MUSE) has an article by Paul N. McDaniel and Anita I. Drever that examines Immigrant Businesses in a New South City (Birmingham, Alabama), asking: Do they form an Ethnic Enclave or International Corridor?

Here’s the abstract and a bit of the introduction that I found interesting. I have eliminated most of the in-text citations and cross-references in the extracts that follow.

Abstract: Immigration is changing the U.S. South in unprecedented ways. First and later generations of Latinos and Asians comprise increasing portions of the population in towns and cities across the region. Some of these newcomers have started entrepreneurial business ventures rather than going to work for someone else. This research examines the forces driving the spatial patterns of and civic leader response to immigrant-owned entrepreneurial establishments in Birmingham, Alabama, a middle-tier metropolitan area. The paper answers the following questions: (1) Why did immigrant businesses begin moving into Birmingham during the last decade and a half? (2) Where are ethnic entrepreneurs opening up retail shops and why? (3) What are the attitudes of city officials towards these multi-ethnic business enclaves? These questions are addressed using a mixed-method approach that includes census data analysis, archival research, personal observations and semi-structured open-ended interviews….

Historically, ethnic businesses have been spatially concentrated…. Ethnic neighborhoods in gateway cities developed at a time when city inhabitants traveled on foot or by streetcar. Ethnic businesses and residences therefore had to be located in close proximity. The ethnic businesses that have opened up in the U.S. South during the past ten to fifteen years largely cater to a clientele within driving rather than walking distance. Many of the recent arrivals to the South have also lived in other parts of the U.S. and are therefore less dependent on ethnic intermediaries to find employment or housing. Research on the residential settlement of new arrivals to the South reveals minimal spatial clustering…. Walcott (2002) did find that ethnic businesses were spatially concentrated along the Buford Highway international corridor between the northeast Atlanta suburbs of Chamblee and Doraville; however she saw minimal evidence of spatial clustering by nationality within this area.

Contrary to the findings in studies of several other southern cities (see Mohl 2003), Asians and Hispanics appear to be settling largely in white neighborhoods …. Dissimilarity index calculations by the authors based on data from the 2000 U.S. Census indicate that one-and-a-half times as many Asians and Hispanics would have to move to evenly distribute their population among blacks as among non-Hispanic whites.

What attracted these immigrants to Birmingham?

The shift in the locus of U.S. economic growth from the Rustbelt in the Northeast to the Sunbelt in the South brought biotechnology firms, large banks, and multinational corporation headquarters to the Birmingham metropolitan area. These global companies—along with Birmingham’s universities—recruited talent from around the United States and the rest of the world…. Like in other locales, Birmingham’s expanding well-paid, highly educated workforce has demanded better housing and more services. This has helped to fuel job growth in construction and basic services and the foreign-born have arrived to fill these jobs (Mohl 2003). And as a result, like in many parts of the country Birmingham has attracted a foreign-born population that is both more and less educated than the metropolitan area as a whole: 19 percent of immigrants have a graduate degree as compared to 9 percent of the total metro population and 27 percent of immigrants have less than a high school education compared to 16 percent of metro Birmingham’s population as a whole….

Where are they living and working?

First, although the residences of the foreign-born are fairly dispersed …, new immigrant businesses in Birmingham are clustered…. A second important characteristic of Birmingham’s ethnic business concentrations are that they are multiethnic in contrast to the Chinatowns, Little Tokyos, and Latino barrios that evolved before the automobile era in gateway cities…. Third, ethnic businesses in Birmingham are located along suburban corridors rather than in neighborhoods per se. In the walking cities of the past, ethnic businesses were located on contiguous neighborhood blocks to accommodate customers traveling on foot or by streetcar to do their shopping. In addition, immigrants often lived in the dwellings above the street level shops. By contrast, Birmingham’s ethnic businesses are moving into a suburban, automobile dominated landscape where zoning ordinances have purposely separated residential and commercial landscapes….

And what kinds of attitudes do they encounter?

The interviews with Hoover and Homewood city officials suggest immigrant business owners receive more verbal support from city officials in Homewood. The fact that the international corridor in Homewood is larger and more complex than in Hoover may in part be the result of the warmer welcome it received from the local government. It is also likely that city officials’ positive attitudes toward ethnic businesses make it easier for immigrant businesses to acquire permits and influence local ordinances.

The author of a key work cited in this article recently published a book titled Ethnoburb: The New Ethnic Community in Urban America, by Wei Li (U. Hawai‘i Press, 2008).

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Rushdie on Slumdog Tourism

In a dyspeptic disquisition on screen adaptations from books in last Saturday’s Guardian, Salman Rushdie coughs up some colorful bile in the general direction of the recent Oscar favorite.

It used to be the case that western movies about India were about blonde women arriving there to find, almost at once, a maharajah to fall in love with, the supply of such maharajahs being apparently endless and specially provided for English or American blondes; or they were about European women accusing non-maharajah Indians of rape, perhaps because they were so indignant at having being approached by a non-maharajah; or they were about dashing white men galloping about the colonies firing pistols and unsheathing sabres, to varying effect. Now that sort of exoticism has lost its appeal; people want, instead, enough grit and violence to convince themselves that what they are seeing is authentic; but it’s still tourism. If the earlier films were raj tourism, maharajah-tourism, then we, today, have slum tourism instead. In an interview conducted at the Telluride film festival last autumn, Boyle, when asked why he had chosen a project so different from his usual material, answered that he had never been to India and knew nothing about it, so he thought this project was a great opportunity. Listening to him, I imagined an Indian film director making a movie about New York low-life and saying that he had done so because he knew nothing about New York and had indeed never been there. He would have been torn limb from limb by critical opinion. But for a first world director to say that about the third world is considered praiseworthy, an indication of his artistic daring. The double standards of post-colonial attitudes have not yet wholly faded away.

via LaurenceJarvikOnline

Like most Oscar winners, Slumdog had not yet enticed the Outliers to make an effort to go see it in a movie theater. Nor is it likely now to find a place in our never-very-long Netflix queue. We’ve already seen, courtesy of Netflix, Thom Fitzgerald’s award-winning, disgusting, poverty-porn movie, The Wild Dogs (2002), which views Romanians as nothing but beggars, con-men, sex workers, or dog catchers—and compares them with heavy-handed symbolism to the wild dogs of Bucharest, which the government is determined to euthanize. All foreigners there (or at least all Canadians!), on the other hand, are either corrupt exploiters or naive do-gooders. And the path from exploiter to do-gooder requires finding your own personal beggar to support: the Canadian ambassador’s wife takes on a legless beggar boy, who follows her around like a puppy; the Canadian pornographer tries to redeem himself by repeatedly giving stuff to a reverse-kneed, hand-walking beggar, whose companions promptly steal it from him; and the Romanian dog-catcher tries to redeem himself by creating a refuge for dogs he was supposed to have euthanized, only to be arrested and have his dogs taken away. I fully agree with the reviewer on Rotten Tomatoes, whose review (no longer available online) includes the quote, “No one in this sterile film is redeemed, condemned or even particularly humanized…. Ultimately, Fitzgerald’s gutless film is a muddled, grotesque travelogue.”

Sorry. Next time I’ll tell you how I really feel.

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Parallel Pejoration of Terms in Korean, Japanese, Chinese

The latest volume of the journal Korean Studies (available by subscription on Project MUSE) contains an article by Minju Kim, “On the Semantic Derogation of Terms for Women in Korean, with Parallel Developments in Chinese and Japanese” (vol. 32, pp. 148-176):

This study investigates two kinds of semantic change in terms for women in Korean, along with parallel developments in Chinese and Japanese, and examines the underlying mechanisms that cause these linguistic changes. In Korean and Chinese, polite terms for young women (akassi and xiăo jiĕ, respectively) have been taking on strong sexual connotations, due to the terms’ association with professions in the sex trade. In Korean and Japanese, terms for older sister (enni and oneesan/oneechan, respectively) have been adopted by more senior speakers to address young women, especially those in service interactions, including those in sex entertainment. This study demonstrates that besides sexist attitudes, other quite different motivations can be responsible for the semantic derogation of terms for women. In an effort to be polite, speakers have adopted positive female terms to address women of lower occupational status. Subsequently, the burden of the lower-status referents has caused the positive terms to undergo semantic derogation.

(Note that, like most linguists, Kim uses Yale romanization to represent Korean, since it most closely represents the phonemic system—and for that reason most closely transliterates hangul. The more common romanization for 아가씨 is agassi.)

Kim notes similar developments in European languages, as in the pejoration of hussy from ‘housewife’ to ‘loose woman’ in English. She also notes the pejoration of the terms for the female half in pairs of terms that used to be more equivalent, such as bachelor vs. spinster or master vs. mistress in English, or in the pairs of terms that used to distinguish ‘young man’ from ‘young woman’ in several Romance languages: Portuguese rapaz vs. rapariga, Spanish hombrezuelo vs. mujerzuela, French garçon vs. garce. (Kim spells rapariga as ramariga and mujerzuela as muerzuela.)

During China’s Cultural Revolution, according to Kim’s sources, the use of xiăo jiĕ was discouraged because of its long history of deferential use to address young ladies of the nobility. Now its use is being discouraged for its derogatory connotations by some sociologists who suggest addressing waitresses as ‘attendant, waiter’ (服务员 fúwùyuán) rather than ‘young lady’.

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Navigating America by Area Code

The Fortune Cookie Chronicles blogger Jennifer 8. Lee notes the key role of telephone area codes in helping Chinese immigrants who can barely read English find their way to smaller cities served by the Chinatown bus services.

That is because many Fujianese restaurant workers are not educated and thus don’t really read and write English. Given that. How do you divide the United States? Not through towns and states. You do it through numbers — hence the area codes. As I wrote in a piece in 2005, job listings in Chinatown employment agencies are often done by area code.

Here’s a snippet from that earlier article, which is well worth reading.

For workers who cannot read the names of their destinations in English, area codes serve as the restaurants’ main geographical identifiers. The workers do not see America as a series of cities or even states, but as a collection of area codes, almost all with dozens upon dozens of Chinese restaurants looking for help. Maps in every Chinese agency break down the country by area code, with recently introduced area codes scribbled in by hand.

For many restaurant workers, the number of hours by bus is a critical measure of how far they are from the American center of their universe, East Broadway in Chinatown. Almost all travel by bus, because many do not speak English or have identification, so they cannot travel by plane. A network of Chinese bus companies has sprung up to shuttle the restaurant workers from Chinatown to the rest of the country. Some have started to draw non-Chinese riders, specifically the “Chinatown buses” that run between New York and Boston or Washington. One bus-company sign advertises the destination and the fare: “Minnesota (612, 551, 952, 763) $150; Wisconsin (920, 715, 608, 414) $120.”

via Culture-making

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Niall Ferguson on Current Economic Prospects

Economic historian Niall Ferguson weighs in on China’s and America’s role in the current global economic crisis under the provocative headline, What “Chimerica” Hath Wrought.

The most important thing to understand about the world economy over the past decade has been the relationship between China and America. If you think of it as one economy called Chimerica, that relationship accounts for around 13 percent of the world’s land surface, a quarter of its population, about a third of its gross domestic product, and somewhere over half of the global economic growth of the past six years….

Yet commentators should hesitate before prophesying the decline and fall of the United States. It has come through disastrous financial crises before—not just the Great Depression, but also the Great Stagflation of the 1970s—and emerged with its geopolitical position enhanced. That happened in the 1940s and again in the 1980s.

Part of the reason it happened is that the United States has long offered the world’s most benign environment for technological innovation and entrepreneurship. The Depression saw a 30 percent contraction in economic output and 25 percent unemployment. But throughout the 1930s American companies continued to pioneer new ways of making and doing things: think of DuPont (nylon), Proctor & Gamble (soap powder), Revlon (cosmetics), RCA (radio) and IBM (accounting machines). In the same way, the double-digit inflation of the 1970s didn’t deter Bill Gates from founding Microsoft in 1975, or Steve Jobs from founding Apple a year later….

But the most important reason why the United States bounces back from even the worst financial crises is that these crises, bad as they seem at home, always have worse effects on America’s rivals. Think of the Great Depression. Though its macroeconomic effects were roughly equal in the United States and Germany, the political consequence in the United States was the New Deal; in Germany it was the Third Reich. Germany ended up starting the world’s worst war; the United States ended up winning it. The American credit crunch is already having much worse economic effects abroad than at home. It will be no surprise if it is also more politically disruptive to America’s rivals.

Among the other developed economies, both the Eurozone and Japan are already officially in recession, ahead of the United States. The European situation is especially precarious because, contrary to popular belief, European banks are in worse shape than their American counterparts. Average bank leverage in the United States is around 12:1. In Germany the figure is 52:1. Short-term bank liabilities are equivalent to 15 percent of U.S. GDP; the British figure is 156 percent. Indeed, the United Kingdom runs a real risk of being Greater Iceland—an economy crushed by a super-sized financial sector.

Moreover, unlike the United States, there is no single European Treasury that can implement multibillion-dollar fiscal stimulus. Monetary policy may be uniform throughout the Eurozone, but fiscal policy is still a case of every man for himself.

Emerging markets, too, have been hammered harder by the crisis than the “decoupling” thesis promised. In the year to the end of October 2008, the U.S. stock market declined by 34 percent. But Brazil’s was down 54 percent, China’s 58 percent, India’s 64 percent and Russia’s 66 percent. When Goldman Sachs christened these four countries the BRICs, they little realized that their equity markets would one day be dropping like bricks. These figures are scarcely good advertisements for the more regulated, state-led economic models favored in Beijing and Moscow.

via A&L Daily

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Japan’s Many Failed Stimulus Plans

In Wednesday’s Washington Post, Amity Shlaes chronicles the failure of Japan’s attempt to stimulate its economy during the 1990s by heavy government investments in infrastructure.

The situation in Japan then was similar in some ways to that in the United States today. A dramatic market crash and a plunge in real estate prices shook what had been a confident nation. Japan turned inward; economists talked earnestly about paradigm shifts. The obsession with exporting no longer seemed to be serving the country well. Leaders cast aside their previous concerns about budget deficits. The then-Ministry of International Trade and Industry sorrowfully let it be known that there were “areas in which Japan lags behind major developed nations.”…

The projects were similar to some infrastructure plans under discussion here today. Bridges? Japan put up the longest suspension bridge in the world. Airports? Kansai International, yes, on an artificial island, but also local fields such as Ibaraki Airport near Mito. Roads? Japan built new streets and highways, including the famous New Tomei Expressway. For biotech and telecommunications, Japan poured out the subsidies.

When one plan proved insufficient, another was begun…. Between 1992 and 2000, the Japanese launched 10 stimulus packages that included public works. The Land of the Rising Sun became the Construction State. Other worthy issues, such as consistent tax reform, lagged. In fact, fiscal reform overall was postponed. After the 1995 Kobe earthquake claimed thousands of lives, the focus on infrastructure was reinforced….

“The construction state is in some respects akin to the military-industrial complex in cold-war America (or the Soviet Union), sucking in the country’s wealth, consuming it inefficiently, growing like a cancer and bequeathing both fiscal crisis and environmental devastation,” commented Gavan McCormack, a professor at the Australian National University. The stimulus plans had the opposite effect of what was expected. Appalled at the country’s new deficits, Japanese consumers closed their wallets.

Worst, though, was the failure on jobs. Unemployment fell in many nations in the 1990s. In Japan, the ’90s were a lost decade: The unemployment rate more than doubled and surpassed the U.S. rate — an unthinkable occurrence just a few years earlier.

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Gandhi: Too Saintly for the Good of Others?

From Indian Summer: The Secret History of the End of an Emperor, by Alex von Tunzelmann (Picador, 2008), pp. 40-41:

Few political figures have been so widely misunderstood as Gandhi, in his own time or today. He emerged at a time when monarchies were falling and communism loomed; he was contemporary with Lenin. To many listeners, aware of the march of events in Russia, Gandhi’s speech sounded like a rallying cry to Indian socialism, with its talk of the casting off of jewels and the power of the workers. This was, indeed, the reason that young radicals like Jawahar [Nehru] were so attracted to him. But a closer examination of Gandhi’s words reveals something different, and much more profoundly religious. He had confronted the moral behavior of society, not its structure. Gandhi called for the princes to stop wearing their finery and instead “hold it in trust” for their subjects. This is not the same thing at all as telling the masses to rise up and seize it. Gandhi was not challenging the princes’ right to hold wealth, nor even their right to reign. He was asking for a change of heart.

Gandhi’s condemnation of princely luxury was part of a much broader preoccupation with returning India to what he supposed had been a prehistoric “golden age” of godliness, simplicity and humility. He had begun to reject Western ideals of progress and technology, and insisted that India’s future lay in a return to simple village life, not industrialization. As a symbol of this, he adopted hand-spinning on a wooden wheel and used only khadi—hand-spun—textiles. He developed a distaste for the synthesized drugs and surgery which he associated with Western medicine, describing them as “black magic.” Doctors, he believed, “violate our religious instinct” by prioritizing the body over the mind and curing diseases that people had deserved by their conduct. Lawyers, meanwhile, had propped up British rule by espousing British law and were like “leeches” on the people, their profession “just as degrading as prostitution.”

This position had fueled continual conflict in his own family life. Unsurprisingly, he was far from supportive of his sons’ ambitions to pursue careers in medicine or law. “I know too that you have sometimes felt that your education was being neglected,” Mohandas wrote to his third son, Manilal. But, he contended, “education does not mean a knowledge of letters but it means character building. It means a knowledge of duty.” His eldest son, Harilal, fared worse. After Mohandas denied him a legal scholarship to London, he ran away from home, married a woman without his father’s consent, was disinherited and ended up unemployed, destitute and bitter. When Manilal tried to lend Harilal money, Mohandas was so furious that he banished Manilal from his presence for a year. Manilal ended up homeless, sleeping on a beach.

It is not easy being a saint, and it is perhaps even less so to live with one. “All of us brothers have been treated as a ringmaster would treat his trained animals,” Harilal wrote to his father in the course of a twelve-page letter deploring Mohandas’s treatment of his wife and sons. And yet, to a wider audience beyond his immediate family, Gandhi’s charisma, determination and fearlessness were inspiring.

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