And I'm awfully spoiled!
Monday, June 7, 2010
Saturday, May 1, 2010
Why Does My Dog Have Swollen Spleen
Two millennia of world growth: Angus Maddison
Last Monday Angus Maddison died at Neuilly to 83 years. We can read here a beautiful portrait of his career.
Maddison is primarily the author of an incredible statistical basis necessary to understanding the modern world. a certain number of notes this blog were based on this statistical basis, which does not cease to inspire me. It therefore seemed essential to me to honor him.
His theoretical thinking itself has not been negligible, partly because it was one of the first to emphasize the need to consider, besides the immediate factors of growth, deeper factors, particularly institutions-which has now become a highlight for most economists.
But his passion for quantification, his "chiffrophilie" to use his expression, which has made him one of the economists who most influenced thinking on economic growth. This passion was quantitative, in fact, led to the creation, from the late 1970s, quantitative estimates of the economic output of more extensive temporally and geographically, to cover the world since the year 1!
Much of this work is found in its 2004 publication, The World Economy: Historical Statistics . (Part of the database on which this publication is based, and a list of his most significant publications are available its page at the University of Groningen, where he was long a professor.)
By sheer force of factual evidence, a number of Maddison's data have transformed the way we look focused on the industrial revolution and the respective roles of the West and Asia (including China) in global economic output.
I would, as a tribute, highlighting some of the most remarkable.
Asia (which here includes the Middle East) has, until the industrial revolution, largely dominated world economic output. She represented in 1000 nearly 70% (60% excluding the Middle East). In 1950, it is less than 20%!
This reversal of the world is particularly noticeable if one includes all the components of the Western world. Of marginal in 1000 (14%), it represents the end of the Second World War 70% of global economic output. The world is so Western. Has since started a relative decline of the West. It is anterior to Europe in 1900 which represents half of world production, but whose relative position then decreases due to the rise of the United States 1.
strength catch up to China is better understood, in fact, given the extraordinary distance that has long been his, and Maddison quantified.
In 1900, China has virtually disappeared from the scene world: it accounts for less than 1% of world production, after having represented almost one third. In 1950, it has the dubious distinction of being the only country in the world where, a century after the Industrial Revolution, the income per capita is lower than in 1500. Only since the death of Mao that China rejoined the world of growth of per capita income nearly two centuries after the West. This shows the magnitude of the catch that he still had to accomplish, and which is still far from complete.
_____________________________________________
1. We see, moreover, that the rise of the West before the Industrial Revolution: An important aspect of the work of Maddison is to have participated in the renewal of the historiography of the Industrial Revolution, emphasizing that growth dynamics that led to a temporality has long, beginning with deep structural transformations from the late Middle Ages in the West. Be as brutal as the industrial revolution, it is not the radical break that was long believed.
2. See, eg, in France, the recently published book by Philippe Norel, History overall economic , Seuil, 2009. For me, the debate is, in fact, wide open, especially compared to the more extreme arguments that make the Industrial Revolution a near accident. Something of Weber's thesis seems to me, in particular, to resist. 
Last Monday Angus Maddison died at Neuilly to 83 years. We can read here a beautiful portrait of his career.
Maddison is primarily the author of an incredible statistical basis necessary to understanding the modern world. a certain number of notes this blog were based on this statistical basis, which does not cease to inspire me. It therefore seemed essential to me to honor him.
His theoretical thinking itself has not been negligible, partly because it was one of the first to emphasize the need to consider, besides the immediate factors of growth, deeper factors, particularly institutions-which has now become a highlight for most economists.
But his passion for quantification, his "chiffrophilie" to use his expression, which has made him one of the economists who most influenced thinking on economic growth. This passion was quantitative, in fact, led to the creation, from the late 1970s, quantitative estimates of the economic output of more extensive temporally and geographically, to cover the world since the year 1!
Much of this work is found in its 2004 publication, The World Economy: Historical Statistics . (Part of the database on which this publication is based, and a list of his most significant publications are available its page at the University of Groningen, where he was long a professor.)
By sheer force of factual evidence, a number of Maddison's data have transformed the way we look focused on the industrial revolution and the respective roles of the West and Asia (including China) in global economic output.
I would, as a tribute, highlighting some of the most remarkable.
First, Maddison's data have highlighted the incredible stability of the per capita wealth, before the industrial revolution. The stirring history policy seems, from this point of view, as a scum floating on top of an economic structure in stone. In the world before the industrial revolution, the son saw the father, that is to say as poorly, for generations. This is the Malthusian world in which G. Clark has studied the mechanisms in a book noticed.
The industrial revolution is therefore one of the most fundamental break in human history. She was transported to a world of constant growth, where the son is always richer than the father, over a dramatic acceleration from the second half of the twentieth century.
Economic growth is fundamentally a phenomenon on the scale of recent human history. But it is also a phenomenon that has upset the balance of power between continents, countries, and cultural areas. This is the second phenomenon which have emerged as particularly remarkable work of Maddison.
The Industrial Revolution is, indeed, the daughter of Europe, and she was slow to spread elsewhere, transforming the old balance.
Asia (which here includes the Middle East) has, until the industrial revolution, largely dominated world economic output. She represented in 1000 nearly 70% (60% excluding the Middle East). In 1950, it is less than 20%! This is because growth has been primarily a Western phenomenon, as other parts of the world have emulated with delay, and with a smaller time success.
The industrial revolution has brought with it a radical change in the balance between continents has made the world a Western world, when mankind had hitherto been dominated by Asia.
This reversal of the world is particularly noticeable if one includes all the components of the Western world. Of marginal in 1000 (14%), it represents the end of the Second World War 70% of global economic output. The world is so Western. Has since started a relative decline of the West. It is anterior to Europe in 1900 which represents half of world production, but whose relative position then decreases due to the rise of the United States 1. The observation of the marginal nature of the West until very late in human history, and the importance of Asia, participated in the renewal of the historiography of the Industrial Revolution: it led him to criticize any analysis seeking to identify root causes, rooted in the very heart of civilization, the success of the West 2. As difficult as it is to accept our ethnocentrism spontaneous, Western civilization has long been second in the history of the world economy, without special character.
This leads to a third lesson from his Maddison data. Phase of economic history which began around 1500 is, contrary to what one thinks spontaneously in the West, a parenthesis in the history of the world. Balances its products can be only temporary: Asia, especially China, is brought back to the place that has historically been his.
The current tremendous growth of China and India should not surprise us: it is only the return of the old balance between human populations. And is still far from complete. The decline of China and India on the global scene alone was amazing. The world has been temporarily, and unusually, Western.
Indeed, although they remain dominant as late as the early nineteenth century (which had already shown the pioneering work of Paul Bairoch), China and India collapsed from that date. More than half of world production in 1800, they represent more than in 1900, approximately 5%. It was not until the 1970s that the catch of their historical position to intervene.
Indeed, although they remain dominant as late as the early nineteenth century (which had already shown the pioneering work of Paul Bairoch), China and India collapsed from that date. More than half of world production in 1800, they represent more than in 1900, approximately 5%. It was not until the 1970s that the catch of their historical position to intervene.
Retrofitting is particularly rapid in China. Yet, despite concern about its power restored, she has now regained half of its relative position over. For Maddison, it is only around 2030 that this rebalancing will end altogether. This shows the extent of transformation of the balance of power that lie ahead.
strength catch up to China is better understood, in fact, given the extraordinary distance that has long been his, and Maddison quantified.
In 1900, China has virtually disappeared from the scene world: it accounts for less than 1% of world production, after having represented almost one third. In 1950, it has the dubious distinction of being the only country in the world where, a century after the Industrial Revolution, the income per capita is lower than in 1500. Only since the death of Mao that China rejoined the world of growth of per capita income nearly two centuries after the West. This shows the magnitude of the catch that he still had to accomplish, and which is still far from complete. _____________________________________________
1. We see, moreover, that the rise of the West before the Industrial Revolution: An important aspect of the work of Maddison is to have participated in the renewal of the historiography of the Industrial Revolution, emphasizing that growth dynamics that led to a temporality has long, beginning with deep structural transformations from the late Middle Ages in the West. Be as brutal as the industrial revolution, it is not the radical break that was long believed.
2. See, eg, in France, the recently published book by Philippe Norel, History overall economic , Seuil, 2009. For me, the debate is, in fact, wide open, especially compared to the more extreme arguments that make the Industrial Revolution a near accident. Something of Weber's thesis seems to me, in particular, to resist.
Thursday, April 29, 2010
Uti And Brazilian Wax
to greet Greek run
We are in the penultimate act of a Greek tragi-comedy: one where the action is accelerating toward an end that we sense tragic.
So far, the only question that arose when it was an investor was in the range of information asymmetries: the Greeks were they serious about their program to reduce government expenditure? Concealing the reality of the budget deficit (including the revelation is the remote origin of the current crisis of confidence) was continuing it? And, more importantly, what kind would be with Europe?
crisis was just manageable. It was enough that the Germans say they want to help the Greeks, that the IMF should exercise interventionism that he knows, tell the truth about the budget deficit and ensure the involvement of the Greek government in reducing costs, and these asymmetries could be reduced. A recent study even shows that it was the realm of possibility to achieve the necessary fiscal adjustment.
But failure to act, owing mostly to say that Germany finally what everyone expected of her, we entered a different reality: in a post-Keynesian radical uncertainty, where it This addition to increasing the transparency of information, because there are more advance information, objectively, that is still to reveal. We're in a situation specular, where the look that each investor is on the eyes of other investors is the creator of a chaotic dynamics radically unpredictable and threatens to take the form of a self-fulfilling crisis of considerable magnitude.
From this point of view, the situation is similar to the situation we experienced following the fall of Lehman Brother , where liquidity has dried up the interbank market, threatening to bankrupt a many banks. Indeed, like a bank, which is always short and always need cash in the short term, all states have a monthly need to issue debt, although debt remains stable. States, in effect, make all of the "cavalry" ("roll over ") On their debt. Permanently bonds maturing past, and the state must pay for them to sell new bonds (unless it is engaged in a drastic reduction of its debt, which no state can do if a recession like ours). It can do this because it is eternal, and therefore every investor knows that this horse will not stop, it will be paid one day, albeit with a new debt, underwritten by a new investor.
The situation of States is, in fact, financially fragile, and so much more than their shorter maturity debt. If investors continue to believe in the permanence of this game of horse, a State shall immediately bankrupt.
For Greece, the situation is worse: the Greek State not only needs new bonds to pay past obligations mature, but more new bonds to finance a huge deficit, given the available resources since over 10% of the country's economic output. In other words, its debt is growing so fast that investors are wondering if it will be solvent in the future.
However the issue of solvency is a Greek question scale several years (4 / 5 years), the time drift of debt renders really insolvent. The questions arose investors so far have that time horizon: they wondered if this budget would be monitored drift in future years and if the Greek state would be solvent term.
But this is no longer the case: investors are now wondering if the Greek state is still liquid, ie whether there are any other investors to maintain the game of horse Debt the Greek State. For if investors no longer accept to lend money to the Greek State be it until next month, it went bankrupt, even if it is in fact leaving him time, he might actually be solvent in the medium term.
other words, the only question being asked by investors is what will make other investors, in a game of anticipation and specular cross. This game is kind of self-fulfilling: it is enough that investors collectively take action in fear of other investors that this fear is realized, and that the Greek state will go bankrupt. And nothing, as change the note of a rating agency, more performative than ever, is sufficient to carry the cross training of these expectations.
Banks are subject to this kind of problem is what is called a run , a situation that occurs when depositors fear they create bankruptcy by withdrawing their funds together to the bank. That is why we have created central banks, which guarantee to depositors that they will be paid no matter what. This warranty remains cheap on the belief that the financial system is built. When the Fed did not provide this role in respect of Lehman Brothers in October 2008, the belief has ceased to exist, and the financial system with it.
What we asked Germany (France having agreed to do it) was nothing more than that: to play the role of Central Bank, to perpetuate the belief in the ability of the State Greek remain liquid, while forcing him to become creditworthy in the medium term.
She did not. And no one knows how far out of the belief can go: there is really no limit to self-fulfilling expectations in situations of radical uncertainty.
And therein lies the paradox may discover Germany: it does not cost much to perpetuate the belief in the sustainability of the system Financial when it is subject to some doubt. But if we delay, the cost can become infinite. A few billion in loans to Greece to market rates enjoyed by Germany would have been enough, there is one and half months. It is now increasingly likely that it is all Greek debt than other countries in the eurozone will have to finance in the years to come (a 100aines billions), no more daring investors still do or only at exorbitant rates. And if confidence grows, and spreads to other states in the eurozone, the cost will simply infinançable by the states most financially solids. Yet we will all pay, the price of an explosion of public debt obligations and the euro area. Even Germany. 
We are in the penultimate act of a Greek tragi-comedy: one where the action is accelerating toward an end that we sense tragic.
So far, the only question that arose when it was an investor was in the range of information asymmetries: the Greeks were they serious about their program to reduce government expenditure? Concealing the reality of the budget deficit (including the revelation is the remote origin of the current crisis of confidence) was continuing it? And, more importantly, what kind would be with Europe?
crisis was just manageable. It was enough that the Germans say they want to help the Greeks, that the IMF should exercise interventionism that he knows, tell the truth about the budget deficit and ensure the involvement of the Greek government in reducing costs, and these asymmetries could be reduced. A recent study even shows that it was the realm of possibility to achieve the necessary fiscal adjustment.
But failure to act, owing mostly to say that Germany finally what everyone expected of her, we entered a different reality: in a post-Keynesian radical uncertainty, where it This addition to increasing the transparency of information, because there are more advance information, objectively, that is still to reveal. We're in a situation specular, where the look that each investor is on the eyes of other investors is the creator of a chaotic dynamics radically unpredictable and threatens to take the form of a self-fulfilling crisis of considerable magnitude.
From this point of view, the situation is similar to the situation we experienced following the fall of Lehman Brother , where liquidity has dried up the interbank market, threatening to bankrupt a many banks. Indeed, like a bank, which is always short and always need cash in the short term, all states have a monthly need to issue debt, although debt remains stable. States, in effect, make all of the "cavalry" ("roll over ") On their debt. Permanently bonds maturing past, and the state must pay for them to sell new bonds (unless it is engaged in a drastic reduction of its debt, which no state can do if a recession like ours). It can do this because it is eternal, and therefore every investor knows that this horse will not stop, it will be paid one day, albeit with a new debt, underwritten by a new investor.
The situation of States is, in fact, financially fragile, and so much more than their shorter maturity debt. If investors continue to believe in the permanence of this game of horse, a State shall immediately bankrupt.
For Greece, the situation is worse: the Greek State not only needs new bonds to pay past obligations mature, but more new bonds to finance a huge deficit, given the available resources since over 10% of the country's economic output. In other words, its debt is growing so fast that investors are wondering if it will be solvent in the future.
However the issue of solvency is a Greek question scale several years (4 / 5 years), the time drift of debt renders really insolvent. The questions arose investors so far have that time horizon: they wondered if this budget would be monitored drift in future years and if the Greek state would be solvent term.
But this is no longer the case: investors are now wondering if the Greek state is still liquid, ie whether there are any other investors to maintain the game of horse Debt the Greek State. For if investors no longer accept to lend money to the Greek State be it until next month, it went bankrupt, even if it is in fact leaving him time, he might actually be solvent in the medium term.
other words, the only question being asked by investors is what will make other investors, in a game of anticipation and specular cross. This game is kind of self-fulfilling: it is enough that investors collectively take action in fear of other investors that this fear is realized, and that the Greek state will go bankrupt. And nothing, as change the note of a rating agency, more performative than ever, is sufficient to carry the cross training of these expectations.
Banks are subject to this kind of problem is what is called a run , a situation that occurs when depositors fear they create bankruptcy by withdrawing their funds together to the bank. That is why we have created central banks, which guarantee to depositors that they will be paid no matter what. This warranty remains cheap on the belief that the financial system is built. When the Fed did not provide this role in respect of Lehman Brothers in October 2008, the belief has ceased to exist, and the financial system with it.
What we asked Germany (France having agreed to do it) was nothing more than that: to play the role of Central Bank, to perpetuate the belief in the ability of the State Greek remain liquid, while forcing him to become creditworthy in the medium term.
She did not. And no one knows how far out of the belief can go: there is really no limit to self-fulfilling expectations in situations of radical uncertainty.
And therein lies the paradox may discover Germany: it does not cost much to perpetuate the belief in the sustainability of the system Financial when it is subject to some doubt. But if we delay, the cost can become infinite. A few billion in loans to Greece to market rates enjoyed by Germany would have been enough, there is one and half months. It is now increasingly likely that it is all Greek debt than other countries in the eurozone will have to finance in the years to come (a 100aines billions), no more daring investors still do or only at exorbitant rates. And if confidence grows, and spreads to other states in the eurozone, the cost will simply infinançable by the states most financially solids. Yet we will all pay, the price of an explosion of public debt obligations and the euro area. Even Germany.
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