Month: March 2005

Savings Deficit or Capital Surplus?

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There’s been a lot of discussion about a savings deficit in the United States. But recently, there have been several articles suggesting that the US…indeed, the entire world…now has a surplus of capital, and that this surplus is pulling down rates of return on investment. (In actuality, supply and demand of capital will always be equal, of course: the question is at what price level…in terms of returns on investment…the supply and demand curves will intersect.)

Floyd Norris makes the capital-surplus argument in The New York Times (3/25). As evidence, he makes these subsidiary arguments:

1)There are low rates of return on debt instruments, and long-term rates have proven to be “sticky”
2)Stock prices are high relative to underlying valuations
3)Countries defaulting on debt have been able to get away with it (he specifically mentions Argentina) implying reduced relative power on the part of owners of capital
4)Increasing management compensation levels, which he believes make the same point about relative power (in this case, of managers vs owners of capital)

These seem like good arguments, except for the last, which feels like a stretch. I’d also observe that many corporations are carrying considerable amounts of cash on their balance sheets, which they’d be unlikely to do if they were seeing lots of compelling opportunities for investment.

But on the other hand….

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Happy 91st to Borlaug

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Instapundit notes that today is/yesterday was the 91st birthday of Norman Borlaug, Nobel Prize winner and Aggie. More than any other single person, he made life better in the second half of the twentieth century. Today, when our blog is heavy with disputes over death counts and the death watch in Florida continues, we can celebrate Borlaug and thank him for what he has done, for the billions he has saved. We can be grateful that one pragmatic man set about (and still sets about) making the world a better place.

Already in his seventies twenty years ago, Borlaug turned his attention to Africa. We are sometimes critical of Carter on this blog (and I think reasonably so), but his union with the father of the Green Revolution appears to bring out the best in the peanut farmer from Georgia – and the best in African soil.

And, thinking of Borlaug, I feel a broader gratitude. To the Chicagoboyz, grateful they let me play on their blog, respectful of the Great Books tradition that influenced so much of our plains life and came from Chicago. And I will go pretty far with them in terms of reducing government, but I am also grateful that in 1862 a Vermont congressman, Justin Smith Morrill, envisioned the Land Grant Schools that have not only educated farm kids (like me, my siblings, my husband, my parents) for the last hundred and forty years but also increased life expectancy- a fact that trumps much.

Our life is mundane, but it sparks the imagination: we sit in the middle of the largest campus in the world as experimental fields stretch for miles. And now Aggies are planting crops in Iraq.

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A Question About the Middle Kingdom

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A reader named Paul Stinchfield left a very interesting question at this post.

I have seen accounts of Chinese citizens becoming violently enraged at even the most polite disagreement with Chinese policy regarding Taiwan, Tibet, etc. And yes, I mean literally, not figuratively, violent. What do you know about this, Mr. Rummel, and what clues might this give us to what the Chinese government might do?

For many years Chinese children were educated to hate ‘foreign [capitalist] devils’ as the ruling elite found that fear and hatred of a foreign menace was an effective method of control. (See Natan Sharansky’s “The Case for Democracy”.) Now, perhaps, we have a ruling elite which was itself educated to believe the propaganda that an earlier generation of rules cynically implemented.

I would be very interested in the thoughts of somebody who has actually studied China.

I’m more interested in military history than current political reality, so most of my studies have concentrated in that area. But there are a few things that jump out when someone takes even a casual glance at China.

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Those who Beseige Shannon & the Schiavo Tragedy

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Thanks to Heiko’s and Jonathan’s comments; they have a sense of proportionality. Also Heiko shows us what a good study can do: narrow, real, thorough; then it points to modifications that will (clearly their motive) save lives.

I delete most of my friend’s e-mails on Schiavo or skim them to be polite. To him, as a Catholic, this case has attained great significance. Quality of life, what is life – these are important questions and of course he believes quite strongly in what Pinker dismisses as the “ghost in the machine.” I’m closer to my friend in that, but not all the way. The tensions involve the big issues – what is life and what is death, the relationship between the family and state. This then moves to the ancient tensions: between the “new” family of the Schiavo’s marriage and the “blood” family of the Schindlers; between the state and the federal government, between the courts and Congress. So, now, not only have people of strong religious commitment weighed in, but so have doctors. Then, politicians entered: not always grandstanding, they are often legitimately moved by these two issues. The big hitters on constitutional law on the blogs then enlisted in the battle. Yes, I’ll admit its importance not only to my friend but to others, on both sides of most of these issues. I can only feel sorrow at her death and sympathy with her parents, her husband, and even those involved in what has become a pathetic circus in front of her hospice. But I still delete. I know my sympathies will be pulled & cloud my mind; I won’t be able to deal with the big questions. Others argue that the cliche is wrong; that, indeed, hard cases can make good law. I have my doubts. Certainly, my husband’s argument that dysfunctional families make bad law seems true. I suspect both sides have enlisted troops to satisfy gnawing uncertainties. Applications in family matters to such external authority comes from a “nuclear option” mentality and a lack of confidence. I sympathize but suspect it arises from an unwillingness to face truths at which most of us would blink.

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Eroding Science’s Brand

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My use of strong language to describe both the process and people involved in creating and publishing the Lancet Iraqi Mortality Survey has really set some readers off. I used such language intentionally, expressly because I did not wish to convey the impression that the only matters under discussion were dry scientific technicalities with no broader import than Iraq. I have used pejoratives such as “scientific whores” to describe those responsible for the study because I am angry and I want people to know it. I am angry because I am scared.

People who think I have been unfairly harsh in my assessment of those who created and published the Lancet paper should ask themselves this:

“What if Shannon is right? What if a major scientific journal and the peer review process it represents has been politically subverted? What are the consequences of such subversion beyond the this particular study?”

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