Assignment 1

Paul Krugman – The Asian Miracle

Grant Downie

1. Why could the USSR achieve impressive growth rates at the early stages of the inustralization process?

Answer:

“Input-driven growth is an inherently limited process”

“Soviet growth was base on rapid growth in inputs”

Mobilization was a key weapon of the Soviets during the Stalin era- with efforts being placed on moving large numbers of the population from the rural locations of Russia to the Urbanised city centre locations. The benefits brought from such a move was staggering in terms of economic boom:

“…pushed millions of women into the labour force an millions of men into longer hours”

As well as the newly motivated work force, focus was placed upon a government centralized education- offering the citizens all opportunity to further extend there education- with the result of producing a new era of highly education employees.

However, this was not a case of improvement in efficiency, but a temporary blip on Russia’s economic health. Stalin’s planners merely created more workers but failed to generate a sustainable output. And for a long term objective of economic dominance, this would not survive.

Summary:

The Soviets ability to motivate the population resulted in a mass increase in employment and education- providing healthy input figures for that period. But failed to use this change to improve on overall efficiency, resulting in a poor long term strategy.

1. Are Krugman’s critical comments about the economic performance of the ‘authoritarian’ Asian states still valid in the early 21C?

With a large portion of the Asian states such as the example Singapore still under a powerful Government ruling- the traditional operation of these states are and will remain the same.

Emphasise being placed upon the input rather than the efficiency output of the nation:

“Startlingly little evidence of improvements in efficiency” [Page 7]

However, one can wonder that with the Authoritarian push on education in the past decades as a long term plan- when the results will show themselves. And although Japan followed a completely different path:

“…Grown both through high rates of input growth and through high rates of efficiency”

The other Asian states are due the similar boom, however this can be placed on the unique attributes of these states- a big one for example being with China and it’s vast [working] Population.

“It’s population is so huge that it will become a major economic power”

With Asia leading the way with Technology, the environment is different than it was decades ago. It is time that these states can apply the Authoritarian leadership and monopolise on not only population but the head start it has with its Educated citizens and sheer size of labour workforce:

“Growth in East Asia will continue to outpace growth in the West for the next decade and beyond”

Summary:

The biggest change is not the authoritarian leadership style, but the economic environment these authoritarian states are placed in. With no specialised output in the 60′s for the early economy adopters- they are now in a position where the push on education and labour will pay off.

1. Is the future for the West post ‘Credit Crunch and Financial Crisis’ one of the selective industrial policies and the replacement of ‘Laissez-Faire’. What of the political power of the Financial Capital in the Anglo-Saxon economies?

noun

* Free Market

The freedom permitted by the Laissez-Faire style is most certainly coming to an end. The Financial Crisis being the final nail in the coffin for the traditional style of letting those do as they wish- especially where the consequences are catastrophic. The lack of government input into the banking sector is considered to be the main contributor to the overall world economic failings.

With the recent G20 summit, emphasis was placed upon transparency and regulation, so the times of radical dealings could be coming to an end in favour of the Industrial Policy route, where regulation is favoured over the hands off approach from the government.

The political power of those under Anglo-Saxon rule will find push towards a Coordinated market economy. Pressure is on to remove the transparency among not only financial institutions, but government leadership due to many considering these as being the culprits of the Global economic crisis.

With the theory of Anglo-Saxon rule being placed upon Short term profit and high risk taking, coupled with deregulated labour market, a large shake-up can be expected within all major Financial Capitals essentially bringing to an end risk taking and place focus on the long term.

Stolen Post To See How It Displays

The aptly named Bryan Appleyard had an interesting profile in the Times of London. He wrote about Steve Jobs without actually being allowed to talk to the man and the resulting tale sounds more like a Mark Oliver profile of the Bilderbergers than a fluff piece on a popular company. However, what Appleyard did come away with was a picture of a company so strange and dysfunctional it makes most Communist dictatorships look like fantasy football leagues.

One of the best paragraphs describes Apple’s development style:

The answer is that, along with computers, iPhones and iPods, secrecy is one of Apple’s signature products. A cult of corporate omerta — the mafia code of silence — is ruthlessly enforced, with employees sacked for leaks and careless talk. Executives feed deliberate misinformation into one part of the company so that any leak can be traced back to its source. Workers on sensitive projects have to pass through many layers of security. Once at their desks or benches, they are monitored by cameras and they must cover up devices with black cloaks and turn on red warning lights when they are uncovered. “The secrecy is beyond fastidious and is in fact insultingly petty and political,” says one employee on the anonymous corporate reporting site Glassdoor.com, “and often is an impediment to actually getting one’s work done.”

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