Bolivia

[Thorgal]

Originally posted by Brachy-Pride
I think I recall reading that the measured average iq of spaniards jumped almost 15 points from their poor times with franco in comparison to the 90´s.

Which proves how silly is this IQ thingy, since people is getting dumber every day.

[Barnabas]

I just meant that as wealth increases iq increases, due to better education, nutrition etc

[Master Zen]

Originally posted by VetLegion
You didn't finish the sentence? I can give you numerous examples where more free markets worked better than less free markets, from China to my own country. I can also give you examples of crappy government monopoly industries which flourished when deregulated. A laissez-faire economy never existed, not even in 19th century England. Why do you insist on extremes?

Why do you insist on your stupid belief that free markets by themselves are better? The first thing they teach you in economics is that context is more important than dogma. You're preaching dogma, and doing a piss poor job at it. You mention China is doing better now than it did before. That is true. Have you wondered why China isn't a more laissez-faire country than it is now if the benefits of free markets are so damn obvious? Because it's enormous growth during the past quarter century has been precisely because of its centralized planning. That's VERY anti-free market.

Same with Japan and it's MITI-guided growth in the post-war era. Same with Korea and Taiwan and their planned growth plans. None of these countries would have achieved their growth levels if they had gone as free market as you are advocating.

What is better in a corrupt country, to let companies battle it out in the market or have state company monopoly which is not likely to be uncorrupt in a corrupt country?

What part of markets not being free in corrupt countries has your brain not yet assimilated half a dozen posts and three pages later?

You must be kidding me. Which Constitution ever supported human rights violations, discrimination, corruption, nepotism, crime? I don't have to read the Mexican Constitution and I can still bet money that it's flawless or even beautiful.

You prepared to lose money VetLegion? I'll gladly hand you my paypal link in case you want to put your money where your mouth is.

I have mentioned that I am not anarcho-capitalist (everything to markets). Institutions of state have to remain, but the government should to remove itself from the economy as far as possible.

That's nevertheless libertarian and neoliberal thought. The neoliberals as emphazised by the Washington Consensus which is pretty much what you've been arguing for the past pages. Guess what, Washington Consensus has been proved wrong by history and many economists have admitted that it went way too far.

Still feel like advocating failed policy for a couple more pages VetLegion?

[Master Zen]

Originally posted by VetLegion
What? Companies can't profit unless they are a monopoly? I need a reference for this I'm affraid

Pick up any introduction to microeconomics book.

In any case you are twisting my words. Companies profit when perfect competition doesn't exist. It's the neoclassical theory which you loooooove...

For which government enforces intellectual property monopolies. Is that the only example of a non government supported monopoly you can think of? See what I'm saying? Markets tend to sort out monopolies if barriers to entry aren't too high. The most famous examples of monopolies, from Standard Oil to AT&T and beyond have been very involved with the government.

What a bullsh*t counterargument!!!

So you're saying that governments should also cease enforcing intellectual property laws? Or rather, you are arguing that if intellectual property laws did not exist the overall social benefit would be compensated by the fact that the Microsoft monopoly would not exist?

THERE WOULD BE NO INCENTIVE TO DEVELOP TECHNOLOGY IF THERE WERE NO INTELLECTUAL PROPERTY LAWS.

My god, I seriously wonder why I am wasting my time arguing with you...

(btw, you want more cases of monopolies not created by government intervention: natural monopolies. If anything, government intervention has actually helped those industries where natural monopolies exist to be a bit more competitive)

Context-free discussions aren't cool, you know? Go back, read what I wrote and quote me saying that level of government spending in GDP is the only measure of government involvement in the economy. It's one of the indicators.

So then, stop trying to make points by using certain indicators to back up your arguments and then contradict yourself by saying that it's just one of many so it doesn't count anymore. In short: you never made a point.

Global Competitiveness Report 2006-2007 (pdf) which was released yesterday ranks glorious Mexico at 58th place, behind such laissez-faire giants such as communist China and half-communist India.

Index of Economic Freedom puts Mexico at 60th place, again behind communist China.

Maybe you didn't do enough?

You can't even count!!

Anyway, I don't claim expertise in Mexico.

And yet you're lecturing me on the economy and the constitutions of my own country...

Planned economy usually manages to achieve high growth when it starts from a low level, has plenty of free labour lying around, and forces huge capital investments. This growth is then often turned into tanks and not higher living standards. Eventually returns get smaller and the growth stops. It's not a system that is viable in the long term.

Who says I'm advocating communism?

Capatalist countries have used centralized planning to far more success than the communists ever did and in fact, the highest growth rates ever achieved by large capitalist countries have been under centralized economies.

I know all this.

Sure doesn't look like you do.

Name me one competitive industry Latin American governments have ever created? It's not like they haven't tried.

See the problem?

Pretty much every large private Mexican company today has either been created by the government or was heavily subsidized or supported before the 1980's. Their very growth was due to the fact that our markets were protected by the government so these companies did not have to compete against more efficient foreign ones while they were still in their infancy (hmmm, exactly like certain East Asian countries did...). Eventually they grew so big that they were able to compete post-NAFTA and in fact are either regional or even world leaders.

Examples: Vitro (glass), Bimbo (bread), Cemex (Cement), Televisa (Broadcasting), Femsa (beverages), Telmex (Telephones), Americal Movil (Cell phones) etc. etc. etc.

So for the last time: LEARN THE FACTS BEFORE YOU OPEN YOUR MOUTH.

Not entirely [China]. But as government retreated, things got better. It's a clue for everyone but you it seems.

You seriously think China would grow at 9-10% a year if the government retreated as far as it could? Funny, but I'd really like to find one single professional economist who would agree with such a thing.

Differences in nutrition don't suffice to explain differences in IQ, as those differences exist even within countries.

Yeah, and nutritional differences exist even within countries too, DUH!

Unlike you, I actually do like empirical research. The one I linked to, IQ and the Wealth of Nations, gives IQ for my country of 90 (Mexico is 87, practically the same given the amount of noise in the reasearch). Unlike you, I don't find those findings offensive at all

Empirical research as in basing your entire argument on an IQ study which has found NO support whatsoever among repectable economics circles?

This discussion is really starting to bore me...

[Dinner]

An example of a competitive company which was created by a Latin American government is Brazil's Embraer. It is arguably the best small to medium sized aircraft maker in the world and it started off as a fully owned government company which grew larger due to government protectionism and subsidies. Of course it didn't really get going until it was privatized in the 90's.

[Master Zen]

Originally posted by Oerdin
An example of a competitive company which was created by a Latin American government is Brazil's Embraer. It is arguably the best small to medium sized aircraft maker in the world and it started off as a fully owned government company which grew larger due to government protectionism and subsidies. Of course it didn't really get going until it was privatized in the 90's.

Actually it did get going before that, it started going under for various external reasons during the 80's and privatization gave it a new life since the government was no longer willing to support it. I nevertheless think we can agree that Embraer wouldn't even exist if had always been private. No way it could have competed against foreign aircraft manufacturers without a government behind it.

(of course, VetLegion will give us a lecture on how we are all wrong)

[VetLegion]

of course, VetLegion will give us a lecture on how we are all wrong

Maybe. Lately I've been looking for a job and busy with studies so I'm not in the mood for long discussions.

Just a little bump to point out an article about Mexico that an economist who's blog I read has written:

http://www.project-syndicate.org/commentary/delong51

That neo-liberal story may be true. But it is an excuse. It may not be true. Having witnessed Mexico’s slow growth over the past 15 years, we can no longer repeat the old mantra that the neo-liberal road of NAFTA and associated reforms is clearly and obviously the right one.

[VetLegion]

More on this. Marginal Revolution chimes in:

http://www.marginalrevolution.com/marginalrevolution/2006/10/why_nhasnt_mexi.html

From the comments, a good one:

In my opinion, the easiest and best way to understand why Mexico has failed to attain/sustain a high rate of economic growth is to compare Mexico to the Asian Tigers that have. The comparision isn’t that hard and the results are significant. A few key differences:

1. Every successful Asian Tiger has a fantastic education ethic and great schools. Note that the ethic came first, the schools followed. A long standing Chinese saying is “there is Gold in books”. Unfortunately, this means that investing in Mexico’s schools won’t help make Mexico a Tiger. Mexico’s people would have to value education first. They don’t and nor do Mexican immigrants in the United States (check out the NAEP data, take your valium first).

2. Every successful Tiger has a strong family system with low (very low) levels of illegitimacy. Restricting reproduction to families (you know, the kind with a father and a mother) adds structure, discipline, and resources to child raising. Boys probably gain the most, although both sexes benefit. Mexico has a very high level of illegitimacy (38%) and appears to have always tolerated out-of-wedlock pregnancy.

3. Every successful Tiger has a strong work ethic. While some Mexicans in the United States may work hard (although not harder than white Americans), the Mexican work ethic in Mexico is not legendary. Clichés about siestas and “manana” didn’t arise entirely by chance. While work attitudes may be changing in Mexico, nobody compares Mexican workers to the Chinese or the Japanese after WWII.

4. With only a few exceptions, Tigers are homogeneous. China, Japan, Taiwan, South Korea, and Hong Kong have only one ethnicity to speak of. Ethnic homogeneity avoids all sorts of social conflicts that bedevil more diverse societies. It may not be PC to say it, but diversity is better formula for Beirut than fast economic growth. Amy Chua (“World on Fire”) has written extensively about the adverse impact of diversity on stability and economic performance. Recommended reading. It is worth noting, that Singapore and Malaysia are not homogeneous and both have good growth records. However, they are also quite authoritarian. This is a key point, diverse societies can prosper, but only by sacrificing freedom, liberty, etc. Helmut Schmidt, the former liberal/left-wing German chancellor has stated the “multiculturalism can only work under authoritarian regimes” and advocated Singapore’s type of government for Europe.

5. All of the Tigers have a very high savings rate. Mexico doesn’t. Mexico’savings rate has historically been well below 20%. By contrast, the Tigers have maintained at least a 30% savings rate and sometimes exceeded 50%. Of course, a high savings rate finances economic development internally and avoids the need for a trade deficit and foreign debt. At a deeper level, a high savings rate demonstrates the ability to defer consumption and invest in the future. This has not been a historical characteristic of Mexican society. Of course, America today is the “black hole” case of nation that can not defer consumption for a nanosecond.

6. All of the Tigers (with one exception) are highly entrepreneurial. Chinese entrepreneurship is the stuff of legends, both in Asia and around the world. Korea is justifiably well regarded as well. By contrast, entrepreneurship is not a core characteristic of Mexican society. One useful metric is high many high tech companies in the US have been founded by Asian immigrants versus Mexicans. However, I should say that the entrepreneurship may be overrated. Japanese business culture is dull and bureaucratic and always has been. Somehow this didn’t prevent Japan from being the economic superstar of the 50s and 60s and becoming the second largest economy on earth (until surpassed by China).

To be honest, the limitations of Mexico’s economy reflect the limitations of Mexico’s society. Mexico was founded by Spanish conquers, not settlers. As such, they created a nation divided by aligned fault lines of race and class. To this day, Mexico suffers the consequences. This is not likely to change soon.

[RGBVideo]

Originally posted by Master Zen
The most successful economies have been the scandinavians. They are the epitome of welfare states. The other successful economies in the sense of growth have been China and the Asian Tigers, all of which have used either large centralized governments or protectionist measures on infant industries (with the exception of the city-states of HK and Singapore).

By your own standards, this is false. Take a look at GDP PPP per capita growth of Sweden during the last 40 years.