Friday, September 17, 2010
Thursday, September 16, 2010
China doesn’t yet measure up as a strong economic power - The Globe and Mail
Chinese ambassador puts a negative spin on China's economic growth, which in fact is the positive spin, trying to convince western consumers don't be threatened by us and keep consuming the Chinese goods.
From The Globe and Mail.
China doesn’t yet measure up as a strong economic power - The Globe and Mail
From The Globe and Mail.
We don’t yet measure up as a strong economic powerThe news that China has overtaken Japan as the world’s second-largest economy has generated quite a few headlines of late. Undoubtedly, this is a significant moment for the country. After all, this hard-earned achievement comes from much effort by the Chinese people over decades. On the other hand, the feelings of the Chinese people are complicated.Lan Lijun
From Wednesday's Globe and Mail Published on Tuesday, Sep. 14, 2010 5:17PM EDT Last updated on Wednesday, Sep. 15, 2010 5:19AM EDT
Since its founding 61 years ago – especially during the past 30 years of reform and opening-up –China has made remarkable strides in economic, social and other fields. In 2009, its gross domestic product reached $4.33-trillion (U.S.) – 77 times what it was in 1949. China’s GDP per capita increased 32-fold. As well, China has topped the world with 13 million vehicles produced and sold; 316 million Internet users and 740 million cellphone subscribers. China’s highways extend 65,000 kilometres. High-speed railway construction has entered a new phase of fast growth. At the same time, many Chinese have a moderate lifestyle earned through hard work.
Let’s face it: These impressive statistics reflect only a part of where the country stands economically and socially. China still faces a number of challenges despite its dramatic progress. It has more than 1.3 billion people. Any problem, no matter how small, becomes enormous when multiplied by 1.3 billion. And any wealth and material resources, when divided by 1.3 billion, will look inconspicuous in per-capita terms.
China’s GDP in the second quarter this year was $1.33trillion. Granted, the number is not small. Nevertheless, China’s population is 10 times that of Japan, thus its GDP per capita is about one-10th of Japan’s. Based on the World Bank’s 2010 World Development Report, China’s national income per capita in 2008 was a mere $2,940, placing China 130th internationally. The World Bank’s 2009 report estimated that there were 254 million Chinese living in poverty, the secondmost in the world. Historically speaking, at the outbreak of the Opium War in 1840, China’s GDP was second to none, accounting for 25 to 30 per cent of the world’s total. But China’s GDP per capita, divided among 410 million people, was only one-fifth of Britain’s. Eventually, China was carved up by foreign imperial powers, becoming a semi-colonial state.
Therefore, a country’s capacity or a nation’s strength is not only judged by its GDP numbers, but also by the quality of its citizens, its creativity, as well as its industrial, agricultural, military and international competitiveness. To be honest, we still have a long way to go in all of these areas.
The reality in China today is that the country’s overall productivity is still very low. The added value of agriculture per labour unit is only $407, less than one-108th that of Canada. On a per capita basis, China is also short on resources. Its arable land and fresh water per capita are way behind the world average. Across China, there is an imbalance in economic development. The disposable personal income of urban residents is 3.3 times higher than the net income of rural residents. Rich provinces in eastern China are obligated to help underdeveloped ones in central and western China. The responsibility is tremendous. In 2008, registered unemployed individuals in urban areas amounted to 8.86-million people. Also, the country is aging but not yet rich. China has to pay a much higher price to cope with frequent natural disasters than many countries. In other words, occupying second place in the world’s GDP rankings is not enough for China to manage its own affairs well.
Ordinary Chinese are not preoccupied with GDP figures. What they really care about is how economic growth, increasing incomes and social advancement will affect their lives. They focus on solving practical problems, such as getting child care, medical services and affordable housing for raising a family. The Chinese people will be happier once these problems are resolved. Our goal is to make the country moderately prosperous by 2020.
What is certain is that China will not avoid its international obligations. These obligations, however, must be proportionate to China’s economic and social development. It is neither feasible nor reasonable to expect China to do things beyond its capacity. The truth is that China is and will remain a developing country for years to come. Instead, we must look objectively at China’s ranking in the world economy and stay sober-minded. We do “have a large mountain to climb” before we become a strong economic power. It is not going to be an easy journey.
China doesn’t yet measure up as a strong economic power - The Globe and Mail
Monday, September 13, 2010
The news-life of a natural disaster
"The media are most attracted to volcano eruptions and earthquakes and pay the least attention to food shortages and droughts ... for every person killed in an earthquake, almost 337 have to die in floods to receive the same expected news coverage.
The Dawn Blog » Blog Archive » The news-life of a natural disaster
Also instrumental in relief response is the distance decay factor, which implies that disasters unfolding closer to the United States would receive more coverage than those unfolding farther away... a disaster in Asia would require 43 times as many dead as in a disaster in Europe to have the chance of news coverage. Thus, for the American news media, 43 Asian lives equal one dead in Europe."
The Dawn Blog » Blog Archive » The news-life of a natural disaster
Sunday, September 12, 2010
The end of tenure ...
Tenure in academia refers to the status professors are awarded that guarantees them job security. Many, of course most are non-academics, argue that there is no longer any need to grant academics tenure, which in the past prevented them from harassment for pursuing research and teaching in matters that were deemed unfavorable by the establishment.
The New York Times also reported on the same in its review of books, which was published on September 5. One of the arguments against tenure is that somehow universities will save money by abolishing tenure. I think this is the most unrealistic argument. Following are my reasons.
First, academics are usually very well trained and have attained the terminal degree, often a PhD, in their discipline. They work for wages much lower than the industry wages. For instance, engineering professors earn much less than what they would earn in the private sector. They agree to such lower wages because tenure offers job security that other careers do not offer. It is therefore not surprising to see engineering and management professors leaving academia for the private sector earning multiples of their academic wages.
If the universities eliminate tenure, they have to inflate the salaries of academics in professional disciplines, such as engineering and management, to account for the added risk resulting from lack of tenure. Otherwise, why would an assistant professor with a management phd join a university for $85,000 instead of joining a management consulting firm for twice as much.
Second, only those academic disciplines where professors may not have lucrative offers from the private sector be able to keep the salaries at the same scales in the absence of tenure. Even amongst their ranks only those would stay with academia who may not be employable anywhere else. This is hardly a formula for success for academia. So until you have deep pockets to pay market wages for the marketable academics, keep tenure as is or improve it so that the students may get better education.
The New York Times also reported on the same in its review of books, which was published on September 5. One of the arguments against tenure is that somehow universities will save money by abolishing tenure. I think this is the most unrealistic argument. Following are my reasons.
First, academics are usually very well trained and have attained the terminal degree, often a PhD, in their discipline. They work for wages much lower than the industry wages. For instance, engineering professors earn much less than what they would earn in the private sector. They agree to such lower wages because tenure offers job security that other careers do not offer. It is therefore not surprising to see engineering and management professors leaving academia for the private sector earning multiples of their academic wages.
If the universities eliminate tenure, they have to inflate the salaries of academics in professional disciplines, such as engineering and management, to account for the added risk resulting from lack of tenure. Otherwise, why would an assistant professor with a management phd join a university for $85,000 instead of joining a management consulting firm for twice as much.
Second, only those academic disciplines where professors may not have lucrative offers from the private sector be able to keep the salaries at the same scales in the absence of tenure. Even amongst their ranks only those would stay with academia who may not be employable anywhere else. This is hardly a formula for success for academia. So until you have deep pockets to pay market wages for the marketable academics, keep tenure as is or improve it so that the students may get better education.
Wednesday, September 8, 2010
Economic View - College Studies for the Business of Life - NYTimes.com
From the New York Times:
Economic View - College Studies for the Business of Life - NYTimes.com
A Course Load for the Game of Life By N. GREGORY MANKIW
AS a Harvard professor who teaches introductory economics, I have the delightful assignment of greeting about 700 first-year students every fall. And this year, I am sending the first of my own children off to college. Which raises these questions: What should they be learning? And what kind of foundation is needed to understand and be prepared for the modern economy?
Here is my advice for students of all ages:
LEARN SOME ECONOMICS You knew this was coming. Perhaps I am just trying to protect my profession’s market share, but I hope it is more than that.
The great economist Alfred Marshall called economics “the study of mankind in the ordinary business of life.” When students leave school, “the ordinary business of life” will be their most pressing concern. If the current moribund economy turns into a lost decade, as some economists fear it might, it will be crucial to be prepared for it.
There may be no better place than a course in introductory economics. It helps students understand the whirlwind of forces swirling around them. It develops rigorous analytic skills that are useful in a wide range of jobs. And it makes students better citizens, ready to evaluate the claims of competing politicians.
For those who have left college behind, it is not too late to learn. Pick up an economics textbook (mine would be a fine choice), and you might find yourself learning more than you imagined.
Not convinced? Even if you are a skeptic of my field, as many are, there is another, more cynical reason to study it. As the economist Joan Robinson once noted, one purpose of studying economics is to avoid being fooled by economists.
LEARN SOME STATISTICS High school mathematics curriculums spend too much time on traditional topics like Euclidean geometry and trigonometry. For a typical person, these are useful intellectual exercises but have little applicability to daily life. Students would be better served by learning more about probability and statistics.
One thing the modern computer age has given everyone is data. Lots and lots of data. There is a large leap, however, between having data and learning from it. Students need to know the potential of number-crunching, as well as its limitations. All college students are well advised to take one or more courses in statistics, at least until high schools update what they teach.
LEARN SOME FINANCE With the rise of 401(k) plans and the looming problems with Social Security, Americans are increasingly in charge of their own financial future. But are they up to the task?
Few high school students graduate with the tools needed to make smart choices. Indeed, many enter college without knowing, for instance, what stocks and bonds are, what risks and returns these assets offer, and how best to manage those risks.
The evidence of financial naïveté shows up every time some company goes belly up. Whether it is Enron or Lehman Brothers, many company employees are often caught with a large fraction of their wealth in a single stock. They fail to heed the most basic lesson of finance — that diversification provides a free lunch. It reduces risk without lowering expected return.
College is an investment with a great return. The gap between the wages of college graduates and those with only high school diplomas is now large by historical standards. If those college grads are going to manage their earnings intelligently, they need to study the fundamentals of financial decision making.
LEARN SOME PSYCHOLOGY Economists like me often pretend that people are rational. That is, with mathematical precision, people are assumed to do the best they can to achieve their goals.
For many purposes, this approach is useful. But it is only one way to view human behavior. A bit of psychology is a useful antidote to an excess of classical economics. It reveals flaws in human rationality, including your own.
This is one lesson I failed to heed when I was in college. I never took a single psychology course as an undergrad. But after the birth of behavioral economics, which infuses psychology into economics, I remedied that mistake. Several years ago, as a Harvard faculty member, I audited an introductory psychology course taught by Steven Pinker. I don’t know if it made me a better economist. But it has surely made me a more humble one, and, I suspect, a better human being as well.
IGNORE ADVICE AS YOU SEE FIT Adults of all stripes have advice for the college-bound. Those leaving home and starting their freshman year should listen to it, consider it, reflect on it but ultimately follow their own instincts and passions.
The one certain thing about the future is that it is far from certain. I don’t know what emerging industries will be attracting college graduates four years from now, and neither does anyone else. The next generation will shape its own economy, as the young Bill Gates and Mark Zuckerberg shaped ours. Those now packing up their clothes, buying textbooks and meeting roommates hold the future in their hands. Every year, when I look out over my 700 eager freshmen on that first day of class, the view gives me optimism about the path ahead.
Economic View - College Studies for the Business of Life - NYTimes.com
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