The second post on the Globalization Institute blog links to a book which contests the idea that protectionism is good for developing countries.  Yes, the currently rich countries imposed heavy tariffs when they were in the growing phase. But this does not mean that the tariffs were good for them. Rather, the tariffs themselves are evidence that a lot of trade was occurring. Note that an isolated country does not need to impose tariffs, because no one can import or export to that country anyway. It is only when the country is exposed to the outside world that domestic producers start lobbying for tariffs on imports. In the 19th century, something similar happened. New transport technologies reduced the costs of trade so much that imports suddenly became possible. It was to stop those imports that tariffs were imposed. But…

On balance, it appears that the new transport technologies were so cost-reducing that that their effects swamped those of rising European and American protectionism. 

So, nope. Trade is not bad for you, whatever your level of development.

The Globalization Institute blog, which I have unfairly neglected for long, has two excellent posts. The first links to a paper that refutes the Peter Principle, which states that individuals are promoted to their level of incompetence.

Part II

“What is it Arjun?” asked the cabbie.

“When I lend, I do not create money, I only monetize credit. That much I could understand. But was this credit just sitting there for me to monetize it? Is there no cost to it?”

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This is interesting. A builder wants to redevelop a 200 acre area filled with chawls in South Central Mumbai. The way he wants to do it is by forming a business partnership with all residents. All stakeholders will become stockholders in his company (I am not exactly sure what the legal structure will be, but the idea is good.)  He still wants the government to help, which is bad, but this is a refreshing change from the slum rehabilitation boondoggles run by the government.

Two Links: FT blog and The Economist

The thing I associate most with the United States is the font Helvetica, so ubiquitous is it. Someone has now made a movie on it.

…Or over the weekend, Part III of the chronicles of The Model Village. Please revise Parts I and II. 

In the entire history of corporations, has there ever been one whose CEO said something like the following to his shareholders? 

Your company is in a declining industry.  Your company is currently profitable and will remain profitable for some time. But eventually, the forces that are causing the decline of the industry will catch up with it. While we could attempt to keep the company alive by trying to make a new product or catering to a different market, we have determined that it would be exceedingly difficult to do so, and attempting it would be a waste of your money. Your interests would be much better served by liquidating the assets of the company in an orderly fashion and returning your money to you. This we will do over a period of 10-15 years. Our employee strength will decrease over time, we will make every attempt to provide for a reasonable career transition for all of them. While they are at it, our employees will be judged, not by how much they contribute to the growth of the company, but by how well they manage its decline.

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There is an incident associated with these words. How many of you knew about it? I remembered the incident yesterday and was surprised how completely I had forgotten about it.

Because of marital problems, and despite his lack of sailing experience, Bonnet decided to turn to piracy in the summer of 1717

The person in question is Stede Bonnet. The Wikipedia article on him tells us further that he was driven to piracy because of his wife Mary’s “nagging and dis comforts he found in a married State”.

One of the woeful legacies of John Maynard Keynes is that many people defend virtually any government spending in his name, saying that spending will stimulate demand, thereby cause increased production and lead to an increase in GDP.

The trouble with this claim is that this is much beyond what Keynes said.

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It is my honour to inform one and all that the Jagadguru, in His humility, is attempting to revert to the name given to Him in his poorvashrama. His true bhaktas should know that in our hearts, He shall always be our Jagadguru. Also, it is my holy duty to point out His plan for The Perfect Society.