Rules of the Game


By Richard Norman


A new book, God and Glory: Britain, America, and the Making of the Modern World, by Walter Russell Mead was discussed a couple of weeks ago by the author at the Council on Foreign Relations (video here). A summary quote:

I want to say quickly that in the book I don’t argue that Britain or America triumphed because they were purely laissez faire. In fact, what I’ve said is that they have an ability to have incredible intense competition but also rules and clear regulators. They’ve managed to mix it. It’s very interesting: almost every sport that’s played today around the world is played under rules developed in either Britain or the U.S. in the nineteenth century. And the idea in developing rules–whether it’s the Marquis of Queensberry rules in boxing or the tennis rules or soccer–is that they wanted a combination. They wanted rules, but they wanted the rules not to suppress competition but to encourage the keenest possible competition. So the idea that rules are antithetical to competition is not part of this Anglo-American genius.

Continue reading

Ron Paul and the Federal Reserve, Part One


By Nick Li


Apologies for 1948’s recent lack of postings! Ron Paul, the Congressman from Texas running in the Republican Presidential Primary, has been in the news a lot – winning four of the five Republican debates so far according to straw polls and coming fourth in fund-raising due to overwhelming internet support. I support a lot of his positions, and his brand of consistent libertarianism is very seductive – anti-interventionist foreign policy, giving more freedom to people (e.g. gay marriage, legalize drugs) while putting checks on government power (banning torture, warantless wiretaps and eavesdropping, a single mandatory ID-card) – even to those of us on the left. Continue reading

Venezuela in 1948 and today


By Nick Li


1948 was a momentous year in world history. In line with the mission statement for this blog I thought it would be interesting to consider the importance of 1948 for one particular country that generates more than its fair share of news, Venezuela. It turns out that a few facts and a little historical context goes a long way towards explaining why Hugo Chavez is so popular in Venezuela, and why claims that he has been the worst disaster ever to hit Venezuela are exaggerated. Continue reading

Where do they stand on trade issues? (Part 3 of 3)


By Nick Li

US Presidential Candidates


18191860.jpgThe U.S. has seen a rhetorical swing towards protectionism in the past few years, thanks to large trade deficits, continued economic weakness in the "Rust Belt" and the hard work of the next generation populists like Lou Dobbs (for a hilarious display of jingoism gone awry, check out his recent campaign to prevent a Chinese sculptor from doing part of the Martin Luther King Memorial in Washington, D.C.). While Bill Clinton ratified NAFTA in 1994 (the North American Free Trade Agreement), Hillary Clinton recently voted against CAFTA (the Central American Free Trade Agreement), indicating how far the pendulum has swung in the last decade for the American left. Continue reading

Where do they stand on trade issues? (Part 1 of 3)

Sarkozy - 021.jpg 

By Nick Li

With a new President in France, new Prime Minister coming soon to the U.K., and a slate of U.S. Presidential hopefuls already campaigning in full force, I thought it would be interesting to delve a little bit into what we might expect from the next round of globalization.



Should we expect anything different from France? Does it even matter? Otto’s recent post shows that Sarkozy, in his own words, will not bring much change to France’s trade policies. The thrust of his campaign message seems to be that globalization will inevitably have some winners and losers and that France needs to do more to take advantage of globalization and be one of the "winners." France must "protect" without being "protectionist." Continue reading

Wolfowitz in 1995

By Richard Norman

As World Bank President Paul Wolfowitz waits to hear from the Bank’s Board of Directors about his future (he’s accused of giving a large pay-raise to his companion), I thought this video from 1995 might be interesting. Here Wolfowitz, talking about Bosnia, describes nation building as "a futile exercise" and, contra Brent Scrowcroft (the other guest), favours uncommitted intervention, efforts not to save the Bosnian Muslims, but just to help adjust their position in the conflict.
Continue reading

Free Markets Need Free People

Mexican border.JPGBy Nick Li

A recent report written for the US Council on Foreign Relations by UC San Diego economist Gordon Hanson challenges the conventional wisdom on illegal migration. Hanson’s previous work has also overturned some of the conventional wisdom, like the idea that Mexican migrants to the US are "negatively selected," i.e. they are the poorest and least educated Mexicans. In fact, Mexican migrants appear to be mildly positively selected, having above average skill and education – 32.6% of residents of Mexico have completed between 10 and 15 years of schooling, while the number for recent Mexican immigrants to the US is 64.8%.
Continue reading

Doha, Cotton and fluff

lamy.jpgBy Nick Li

I feel sorry for World Trade Organization Director-General Pascal Lamy. He has one of the hardest jobs in the world – forging a multilateral agreement between 150 member countries that requires explicit consensus on a wide range of issues that are politically charged in all countries, while trying to comply with the broader goal of `development’ set out in Doha, Quatar 2001.
Continue reading

IMF Gets a New Chief Economist

simon-johnson2.jpgBy Nicholas Li

On February 28th Simon Johnson was named the new chief economist at the IMF. Professor Johnson is an economist at the MIT business school with previous work experience at the IMF. He takes over from Raghuram Rajan, an economist at the University of Chicago. As chief economists, their responsibilities include setting the IMF’s research agenda and also providing major input into policy.

The interesting thing about Johnson and his predecessor Rajan is that their research is concentrated in financial institutions and institutional economics more broadly. Johnson is perhaps best known for being the J in AJR (Acemoglu, Johnson, and Robinson), the famous trio of economists who wrote "The Colonial Origins of Comparative Development" the most cited article on growth and development economics in the last decade. That paper examines how malaria and other ecological conditions that influenced early settlement patterns (in particular the decision by white Europeans to settle or to set up "extractive" colonial regimes) influenced the quality of institutions (in particular the strength of property rights, the judiciary, and democracy) and subsequent growth patterns in the 20th century.
Continue reading

What’s going on in Argentina?

Bandera-argentina.jpgBy Nicholas Li

Argentina is no stranger to inflation. Foreign investors, labor unions, and international financial institutions like the IMF and World Bank have always kept a close eye on inflation and pressured the government to control it. Argentina’s ultimately disastrous decision to adopt a currency board and peg the peso to the dollar in 1991 was born out of a desire to bring inflation under control. In Latin America, Ecuador has dollarized for similar reasons. Argentina is much more like Ecuador than El Salvador, the other country that dollarized recently to promote closer economic ties with the United States and improve financial intermediation.
Continue reading