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Archive for February, 2014

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Fun and inspiring lecture by Randy Pausch

Link to his book

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The History and Future of Everything Put time in perspective.

The Science of Kissing

Everything is a Remix – A documentary on ideas and innovation.

Digital sleight of hand

Without the Doing, Dreaming is Useless – One of the many videos on the creative process from 99U.

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Pritchett and Summers wrote that “regression to the mean is the single most robust finding of the growth literature and the typical degrees of regression to the mean imply substantial slow-downs in China and India relative even to the currently more cautious and less bullish forecasts.”

Some thoughts/takeaways:

  • Our understanding on economic growth & development remains poor: “super-rapid growth is due in part to a large residual or unexplained component.”
  • Japan, Korea, and Taiwan fit the regression to the mean story, but that doesn’t mean they fail to transit to higher income economies.
  • Economists are bad at forecasting growth (near or long term) and often miss major turning points. Most forecasts are based to a large extent on recent growth figures.
  • The regression to the mean is a long-term argument so we shouldn’t use it to forecast growth in the near or even medium term (it would probably draw the same conclusion every year over the past decade). Similarly, perhaps we shouldn’t be too bearish on countries that seem to be making lots of poor decisions (e.g. Brazil, Russia, Argentina) if our horizon is long enough.
  • In the country specific section, the authors resort to “institutional quality” to argue why emerging market growth tends to be less persistent than developed market growth (which tends to grow at mean rate). So the bottom line seems to be whether China succeeds in its reform plans (reduce corruption, improve the rule of law, etc.). Given predicting politics is difficult even in the short term, let alone decades, today’s growth tells us little about future growth in places where institutional reforms are needed. 
  • My guess is that Singapore’s political system is the model China wants to move towards. Whether it can manage the transition well is an open question, and I think prolonged political instability is the biggest risk to its long-term growth outlook. On the positive side, China is taking reforms more seriously than most other emerging markets, so on net I’m optimistic that China will become a high-income country someday. 

 

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The Cult of Overwork – “Overwork has become a credential of prosperity” even though we know “long hours diminish both productivity and quality”. The puzzle is why we (at least for those living in relatively high income places) still work so much, and don’t enjoy more leisure as Keynes wrote back in the 1930, or as Bertrand Russell recommended in In Praise of Idleness (excerpts below).

What Chinese officials learn from the Party training school – Some officials are impressive indeed, though not sure how much can be attributed to the training. 

How I made sure all 12 of my kids  could pay for college themselves – Sensible parenting principles that seem to strive a balance between the extreme generalizations of the free-range Western style and the Asian tiger parenting style. Remind me of the highly recommended book How to Talk So Kids Will Listen & Listen So Kids Will Talk

Memoirs of a Would-be Macroeconomist by Arnold Kling- Good coverage of the recent debates and development in macroeconomics from various schools of thought. I especially enjoy the description of his experience working at CBO and the Fed.

Excerpts from Russell’s In Praise of Idleness:

I think that there is far too much work done in the world, that immense harm is caused by the belief that work is virtuous, and that what needs to be preached in modern industrial countries is quite different from what always has been preached.

……

It will be said that, while a little leisure is pleasant, men would not know how to fill their days if they had only four hours of work out of the twenty-four. In so far as this is true in the modern world, it is a condemnation of our civilization; it would not have been true at any earlier period. There was formerly a capacity for light-heartedness and play which has been to some extent inhibited by the cult of efficiency. The modern man thinks that everything ought to be done for the sake of something else, and never for its own sake.

……

When I suggest that working hours should be reduced to four, I am not meaning to imply that all the remaining time should necessarily be spent in pure frivolity. I mean that four hours’ work a day should entitle a man to the necessities and elementary comforts of life, and that the rest of his time should be his to use as he might see fit. It is an essential part of any such social system that education should be carried further than it usually is at present, and should aim, in part, at providing tastes which would enable a man to use leisure intelligently. I am not thinking mainly of the sort of things that would be considered ‘highbrow’. Peasant dances have died out except in remote rural areas, but the impulses which caused them to be cultivated must still exist in human nature. The pleasures of urban populations have become mainly passive: seeing cinemas, watching football matches, listening to the radio, and so on. This results from the fact that their active energies are fully taken up with work; if they had more leisure, they would again enjoy pleasures in which they took an active part.

Excerpts from Keynes’s Economic Possibilities for our Grandchildren:

Thus for the first time since his creation man will be faced with his real, his permanent problem-how to use his freedom from pressing economic cares, how to occupy the leisure, which science and compound interest will have won for him, to live wisely and agreeably and well.

The strenuous purposeful money-makers may carry all of us along with them into the lap of economic abundance. But it will be those peoples, who can keep alive, and cultivate into a fuller perfection, the art of life itself and do not sell themselves for the means of life, who will be able to enjoy the abundance when it comes.

Yet there is no country and no people, I think, who can look forward to the age  of leisure and of abundance without a dread. For we have been trained too long to strive and not to enjoy. It is a fearful problem for the ordinary person, with no special talents, to occupy himself, especially if he no longer has roots in the soil or in custom or in the beloved conventions of a traditional society.

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Of course there will still be many people with intense, unsatisfied purposiveness who will blindly pursue wealth-unless they can find some plausible substitute. But the rest of us will no longer be under any obligation to applaud and encourage them. For we shall inquire more curiously than is safe to-day into the true character of this “purposiveness” with which in varying degrees Nature has endowed almost all of us. For purposiveness means that we are more concerned with the remote future results of our actions than with their own quality or their immediate effects on our own environment. The “purposive” man is always trying to secure a spurious and delusive immortality for his acts by pushing his interest in them forward into time.

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