September 24, 2012

Charter Cities Setback: Who could have imagined?

The econosphere has been abuzz for several years with NYU professor Paul Romer's plan to bring the benefit of Good Institutions to Central America by building "charter cities" in the banana republic of Honduras. (Here's Romer's 2011 TED talk.) As economist Daron Acemoglu has explained, the only thing that differentiates a rich country from a poor country is that the former has Good Institutions. So, what the Third World needs is for American economists to plan for them private chartered cities with world class Good Institutions. It's a no-brainer.

Thus, Romer worked out a deal with the government of Honduras to turn state of the art development economics theorizing into reality by building three private cities in Honduras.

What could possibly go wrong? Who could object to such a high-minded, altruistic initiative? 

Well, there are always petty carpers everywhere. For example, a Honduran peasants rights lawyer named Antonio Trejo Cabrera disliked Romer's proposal. The Montreal Gazzette reported yesterday:
Trejo had also helped prepare motions declaring unconstitutional a proposal to build three privately run cities with their own police, laws and tax systems.

In Honduras, however, they have time-honored ways of cutting through red tape and nuisance lawsuits:
Antonio Trejo Cabrera, 41, was shot five times while attending a wedding in the capital, Tegucigalpa, the Peasant Movement of the Valley of Bajo Aguan said in a statement. 
Trejo was a lawyer from three peasant co-operatives in the Bajo Aguan, a fertile farming area plagued by violent conflicts between agrarian organizations and land owners. More than 60 people have been killed in such disputes over the past two years. The lawyer had recently helped farmers gain legal rights to several plantations.... 
Just hours before his murder, Trejo had participated in a televised debate in which he accused congressional leaders of using the private city projects to raise campaign funds.

Meanwhile, Professor Romer has announced (see Marginal Revolution) that he has been frozen out of his oversight role by the government of Honduras, so he's washing his hands of the whole deal.

An earlier American intellectual who had had big plans for Honduras, the filibuster William Walker, who wanted to add Central American countries to the United States as slave states, died by firing squad in Honduras in 1859. Professor Romer should be glad he's out of there without enduring the fate of Walker and Trejo. 

It almost seems as if land ownership in Central America is very serious stuff. (Remember the Death Squads of the 1980s?) Maybe it's hard for American theoreticians to figure out what's really going on in places like Honduras because the truth is only whispered about among locals for fear of ending up like the brave Attorney Trejo.

Perhaps political power does come out of the barrel of a gun.

This fiasco resembles a miniature version of how the Harvard econ department helped provide intellectual air cover for budding oligarchs stealing much of the assets of Russia in the 1990s. Isn't it about time for economists to do some soul-searching and collective self-criticism?

132 comments:

Anonymous said...

Latin American elites are not infrequently romanticized by the Right but many of them are more like Italian mafia dons rather than nice, respectable people.

Anonymous said...

The whole point of economists is to give an intellectual veneer to the schemes of ruthless oligarchs.

Anonymous said...

"Latin American elites are not infrequently romanticized by the Right..."

By "Right" do you mean the Bush family?

Anonymous said...

Is it actually a setback? I mean they did kill one of the opponents of the project. Romer's getting out of Dodge but there are probably other economists out there willing to shill for this.

Anonymous said...

I have been doing pro-bono research on education in the U.S., particularly on high schools.

Aside from going through the very significant scholarship that's out there, you also go through the major papers for the debate.

Just a few days ago, I read through the NYT's series on the NYC public school system.

There has been a very significant resegregation in the past few decades.

Although cities are more diverse than they used to be, white-black segregation is now back to 1950s levels, some say before that.

And on this topic, the NYT wrote about a charter school with 92 % black students(5% hispanics and a few token mixed race folks. Not a single white or asian child).

The attitude was schizophrenic, as it usually is.

The parents blamed white people in general, they whined that there were too many white parents.

The students whined about being isolated, not seeing white people. Some expressed delusional fantasies that all white children are going to ultra-rich schools.

They seemed to know only of white people from TV where they see the sit-com version(the archetype is 'Friends' where the average white New Yorker seems to own their own condo, if we are to believe what Hollywood tells us).

But what truly piqued my interest was the comments. Most were from self-described liberals.

Many of them outright denounced the racial resentments of the parents, but what was also interesting was their own stories of how they avoided black schools.

They basically said "it's about class". If they believe their hogwash or not is hard to tell.

It's probably a combination.

Yet, the net effect is the same as those who openly talk about avoiding blacks(and the pathologies which always follow).

I think a similar effect is true for many liberals who pay lip service to these kinds of projects. Sure, you always will have genuine fanatics, but deep down, most liberals will not really believe in stuff like that.

They will officially keep their hopes up, perhaps give a dime or two to soften their own inner voice of discontent (and to be seen caring, which raises their status in the eyes of other white liberals, which is often more important for them than the actual programs they are supporting or the people at the receiving end).

The school segregration issue is pretty interesting in the sense that many of the most active segregators are liberals. True, when you do the research, there are genuine diverocrats among the well-off white liberals who specifically place their (always white, never mixed-race) children in diverse schools out of ideological reasons.

But even then, they always couch their reason with "I don't want them to be the only white child in school".
Usually these schools tend to have a minority of black children, this seems to go unsaid.

Asian children are a boon, and upwards-mobile immigrants are fine too(whether they are from Sri Lanka or Bangladesh seems to have little effect).

Again, there could and should be books on the wide variety of liberal disconnects between official rhetoric and actions.

It wouldn't surprise me one bit if more white liberals held soft racist views of blacks than conservatives, who seem to think that all you need is a tax cut and get rid of government programs to solve all problems.

Liberals, who are inevitably charged with administering all the programs that keep on growing, know better.

And they have to feed the hungry mouths at home, so they keep the illusion alive.

But their children, for the most part, go to the exact opposite of where their mouth is, and usually to specifically white schools.

Eric said...

Perhaps political power does come out of the barrel of a gun.

Mao was a jerk, but he wasn't stupid.

Anonymous said...

It almost seems as if land ownership in Central America is very serious stuff.

Land ownership is serious stuff everywhere since land is inelastic. Grabbing land means you can grab the land rent. It's why so many wealthy people are real estate magnates. If you own the land, you capture most of the economic growth of the location via rising rents and land value.

sunbeam said...

"This fiasco resembles a miniature version of how the Harvard econ department helped provide intellectual air cover for budding oligarchs stealing much of the assets of Russia in the 1990s. Isn't it about time for economists to do some soul-searching and collective self-criticism?"

That is the result, but I'm curious as to whether that is actually the design, or just a side effect.

In other words does the Economics Department of the University of Chicago truly believe in what they say, or is it all some kind of cynical game?

I really can't tell. I'd tend to think they are all true believers, but wouldn't be surprised to find out otherwise.

BTW, I just said the econ department at the University of Chicago as an indicative example because they are quite famous. You could plug in lots of people, lots of other organizations, from all around the world that say the same kinds of things.

Anonymous said...

The Harvard economists were just helping their co-ethnics in Russia.

Anonymous said...

In my opinion, private cities are a brilliant idea for helping regular people escape the horror of being governed by progressive oligarchs.

The ruling class cannot allow private cities to catch on, because everyone would want to live in them. The game would be up. Private cities mean efficient livable, affordable urban areas that don't suffer from corruption and dysfunction and crime.

My tin foil theory is that nefarious progressive money was behind this "peasant's rights lawyer" to throw a wrench into the operation. And then, that wasn't enough, they killed him in a false flag attack. Obviously the people will assume that the "evil corporations" killed him because he was "standing up for the peasants" and then the whole private city business becomes very messy and embarrassing and can't go anywhere in Honduras for a while, if ever.

Private cities are becoming a big deal in India, but as our host has pointed out, for some reason nobody in the West ever seems to give a damn about India.

http://forbesindia.com/article/resolution/the-new-cities-of-india/19662/1

Cail Corishev said...

These cities weren't by any chance built around copper mines owned by a Spanish playboy, were they?

Anonymous said...

These cities weren't by any chance built around copper mines owned by a Spanish playboy, were they?

How droll.

NOTA said...

Cail:

The church will stand, I think. They'll need it.

Anonymous said...

Ha ha. It's a beautiful idea. But didn't we already build casinos in central America? More CULTURAL institutions, you say? Well how about Caesars Palace and the Venetian?

Gilbert Pinfold.

Anonymous said...

"Private cities are becoming a big deal in India, but as our host has pointed out, for some reason nobody in the West ever seems to give a damn about India."

I my be wrong, but isn't it India's job to care about India?

Anonymous said...

Actually, Romer isn't like the Harvard economists who aided/abetted Russian ollies. If anything, Russia might have done better with charter cities--not that such would have been allowed in Russia.

Unlike Harvard economists who just worked with the Russian rot, Romer at least tried to plant seeds of good governance in Honduras, but Hondurans didn't want it.
He can be blamed of naivete but not cynical opportunism.

What lesson to take from this?
People in corrupt nations wanna stay in control of things. If social and political improvements mean they'll lose power, they are gonna find ways to mess up new proposals or only milk it for easy funds.

By the way, 'death squads' is part of leftist terminology. Notice the left never referred to leftist mass murderers as 'death squad'. It was always 'rightwing death squads'. Since Che Guevara said leftists should be 'killing machines', we should refer to leftist murderers as 'leftist killing machines'.

Anonymous said...

People in corrupt nations wanna stay in control of things. If social and political improvements mean they'll lose power, they are gonna find ways to mess up new proposals or only milk it for easy funds.

CBS Concedes: Romney Better Push Libya Because the Press Won't 'Make the Case for Him': CBS News political director John Dickerson on Sunday conceded the obvious, advising Mitt Romney to make Libya an issue in the campaign because the media "isn't necessarily going to make that case for him"...

And just a few minutes ago, Ace made a very similar point: ...If Obama loses -- and I believe he will -- the media will lose greatly. A shift against Obama, and the unavoidable "What Went Wrong" which must follow, would include all of those stories and inputs they refused to cover. It will be an even greater indictment of them than of Obama. Obama will be repudiated, but they will be humiliated...

Anonymous said...

Unlike Harvard economists who just worked with the Russian rot, Romer at least tried to plant seeds of good governance in Honduras, but Hondurans didn't want it.
He can be blamed of naivete but not cynical opportunism.

What lesson to take from this?
People in corrupt nations wanna stay in control of things. If social and political improvements mean they'll lose power, they are gonna find ways to mess up new proposals or only milk it for easy funds.


Presumably, the people who ordered the hit on the peasants rights lawyer were the people that were pushing for the charter cities.

stari_momak said...

This incident isn't actually a data point against the Acemoglu hypothesis. In fact, it is a data point leaning in favor of his hypothesis. The institutions supporting large land owners appear to be quiet entrenched -- formally and informally. Not saying Acemoglu is correct , just saying this case isn't an illustration of his error.

(I once asked him after a talk why he concentrated on maritime empires rather than looking at terrestrial empires like the Ottomans, he the standard non-answer of an academic, I study what I study, it's up to others)

Anonymous said...

Land ownership is serious stuff everywhere since land is inelastic. Grabbing land means you can grab the land rent. It's why so many wealthy people are real estate magnates. If you own the land, you capture most of the economic growth of the location via rising rents and land value.

So, Henry George was correct, and the proper distributist tax policy is heavy on land taxes (and possibly corporate income taxes), and not personal income taxes.

Steve Sailer said...

"Presumably, the people who ordered the hit on the peasants rights lawyer were the people that were pushing for the charter cities."

We don't know that for sure. The Powers That Be in Honduras had various reasons for disliking Trejo. But, still ...

Anonymous said...

"Here's Romer's 2011 TED talk.)"
Is it just me or to ted talks = the audience and speakers - come across as smug, with an extraordinary amount of hubris, but in reality just dumb-pc-makes-you-stupid malcolm gladwellish conformists trying to perpetuate their political class.

Steve Sailer said...

Maritime empires are just so much cooler than land empires. Therefore, all we need to do is build a few Singapores or Hong Kongs and not worry about all that petty stuff about who owns farm land. It's so depressing.

Anonymous said...

It is weird to me, seeing Jeffrey Sachs suddenly hailed as the messiah of foreign aid to the Third World, showing us how we can lift Africa out of poverty with judicious applications of western money...and no one mentioning how he was directly responsible for the mass immiseration of the Russian people in the 1990s, which racked up the country's biggest death toll since Stalin's era. Literally millions died prematurely because of Sachs' shock therapy policies being implemented in Russia, and he's never been held responsible for it.

Anonymous said...

Maritime empires are just so much cooler than land empires. Therefore, all we need to do is build a few Singapores or Hong Kongs and not worry about all that petty stuff about who owns farm land. It's so depressing.

I don't think cities are immune to this. Didn't families back in Renaissance Italy war and assassinate and engage in intrigue against each other to control cities?

Manhattan's land value is apparently greater than the value of all the capital equipment in the US. It's easy to imagine ambitious men engaging in violence to capture this if the gov't had less of a monopoly on violence in the US.

Ed said...

"The whole point of economists is to give an intellectual veneer to the schemes of ruthless oligarchs."

Academics and journalists are fulfilling the same role that priests did before industrialization.

I've also wondered how many things were sort of understood but left unsaid, because if you said them openly you could get killed. I think modern society runs much more on old fashioned intimidation than, well, is said.

Anonymous said...

"This incident isn't actually a data point against the Acemoglu hypothesis. In fact, it is a data point leaning in favor of his hypothesis. The institutions supporting large land owners appear to be quiet entrenched -- formally and informally."


Yes and no.

No, in the sense that Assmugly ignores the reasons why some peoples/cultures are less corrupt than others.
Because he ignores race and spiritual/moral culture, he gives the impression that poor nations can be fixed with new institutions.
But good institutions are not so much governed by good laws as good habits, values, and attitudes, that those develop over time.

Anonymous said...

This plan won't work. They don't need charter cities. What these countries desperately need are CHARTER AIRFIELDS. Only then will their ancestors deliver them their richly deserved cargo!

Steve Sailer said...

"This incident isn't actually a data point against the Acemoglu hypothesis."

Right. But it's an illustration of how Acemoglu's Institutions Uber Alles ideology encourages naive crackpot thinking like Romer's.

Hong Kong and Singapore have good institutions, so all we need to do is establish three cities with similar institutions in Honduras, right?

In Acemoguluism, geography, much less human capital, doesn't matter, as Acemoglu has reiterated in his debate with Jared Diamond.

But, the reality is that Hong Kong and Singapore benefit from superb geography to be trade entrepots for massively populated areas with average to strong human capital.

Honduras, in contrast, has crap geography. It's a small place of little importance with poor access to anywhere more important. The locals aren't very industrious and even if they became more so, this will never be the Pearl River because Honduras is on a narrow isthmus.

sunbeam said...

"So, Henry George was correct, and the proper distributist tax policy is heavy on land taxes (and possibly corporate income taxes), and not personal income taxes."

I've heard that name, but I know next to nothing about Henry George.

But I do think I've read that more American fortunes have been made through real estate in some way, than any other economic activity. Not manufacturing, shipping, or even "finance" has made as many rich people.

AllanF said...

"Isn't it about time for economists to do some soul-searching and collective self-criticism?"

Actually they're patting themselves on the back that the debauch-job the Fed is doing on the dollar has made the US' recovery the best in the rotted-out Developed neighborhood.

Of course, the political over-throws in the middle east, and the slave-revolts more recently in S. Africa and China are totally unrelated to volatile food and fuel inflation. Everyone knows food and energy aren't Core Inflation. No worries, the Fed will be able to put the brakes on things once employment picks back up and before Core Inflation washes ashore here. What could go wrong? Whocouldanode?

Anonymous said...

Romer was naive, but I think the basic idea is right. The question though is how to cut the chord with the powers that be in these lousy 3rd world cities. That's nearly impossible, but it has been done.

I'm not optimistic that our academic class will come up with anything. As Steve so often points out when you stop saying something you stop thinking it, so they're approaching the problem with half their brains tied behind their backs.

jody said...

meanwhile, SAT verbal scores in the US hit an all-time low in 2012.

doesn't the united states already have all the "good institutions"? how are SAT scores reaching an all-time low if the racist americans have already hoarded all the good institutions for themselves?

note this is AFTER recentering the SAT in 1995 to make it easier. so SAT scores today are actually much lower than even that.

M Steinberg said...

Mencius Moldbug’s analysis of Romer’s Charter Cities idea is a must read:

"What Professor Romer is proposing is exactly colonialism. What's worse - he says that like it's a bad thing. In one breath, he steals the idea and slanders its real authors. Unbelievable.

The Jedi mind trick is revealed. Professor Romer is digging up ancient chestnuts from the graveyard of history, repainting them slightly, and selling them to Davos Man as his own work. Nice job if you can get it. Would you trust this man with your daughter?

The fundamental observation of colonialism is that non-European societies thrive under normal European administration, at least in comparison to their condition under native rule. This observation was obvious during the colonial period. Since, it has only grown more so - at least, to those who can handle the truth."

Ex Submarine Officer said...

The Mexicans are pissed because we got the side of the border with the good roads.

Ex Submarine Officer said...

OT, but the U.S. reminds me more and more of East Germany every day...

http://townhall.com/columnists/kyleolson/2012/09/23/complaints_mount_against_michelle_obamas_new_lunch_menu

Just like all the victims of communism let their bourgeois obstinacy get in the way of all the wonderful things that were supposed to happen should everyone embrace communism.

AmericanGoy said...

"So, what the Third World needs"

OK, am looking forward for your suggestions, curious about what...

"is for American economists"

AAAAAAAAAAAAAAAAAAAAAAAGH!

AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAGH!

AAAAAAAAAAAAAAAAAAAAAAAAAAGH!

"to plan for them"

AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAGH!

RUUUUUUUUUUUUUUUUUUUUUUUN!

HIDE DE WYMYN UND CHYDLRYN!

Anonymous said...

Steve, your journalistic formatting has caused me to spit soda all over my keyboard. You owe me a new keyboard.

". . . was shot five times . . . "

This is why I keep coming back.

Carol said...

Haha, Steve's got it. Planners (of all stripes) are so cocksure they can make things happen, things that grow organically from circumstance. They can't do it.

Sounds almost like the Darien Scheme.

Marlowe said...

"Private cities are becoming a big deal in India, but as our host has pointed out, for some reason nobody in the West ever seems to give a damn about India."

I resent the imputation; my country pays for its public lavatories.

I lost some respect for Murray Rothbard when I came across him praising Franco. Perhaps a jones for right wing dictators is the love that dare not speak its name among libertarian free market advocates? A counter-part to the neo-conservative desire to enforce democracy and human rights worldwide with bayonets.

Alex Cox directed a weird film based on General Walker back in the '80s starring Ed Harris. A sort of Clash video meets Spaghetti western meets Joseph Conrad novel (Nostromo & Heart of Darkness) version of 19th c. Latin American history.

I seem to recall Reagan saying something about Honduras being 2 days drive from Harlingen, Texas. The country had strategic significance, once.

bjdubbs said...

Bring the institutions to the people is a heck of an improvement over "bring the people to the institutions." So I couldn't be more behind Romer and his Spanish castles.

Anonymous said...

LOL

Charter Cities

aka

Colonies

nuthin' new under the sun

Anonymous said...

Eric said...

Perhaps political power does come out of the barrel of a gun.

Mao was a jerk, but he wasn't stupid.


In the past I would have agreed. But now I am not sure. After all, the well armed conservatives of America have pretty much lost their nation over the past 50 years to a group of folks who never had to use guns.

It seems that political power today flows out of the electromagnetic spectrum. And those who control that spectrum, have the power.

Anonymous said...


It is weird to me, seeing Jeffrey Sachs suddenly hailed as the messiah of foreign aid to the Third World, showing us how we can lift Africa out of poverty with judicious applications of western money...and no one mentioning how he was directly responsible for the mass immiseration of the Russian people in the 1990s, which racked up the country's biggest death toll since Stalin's era. Literally millions died prematurely because of Sachs' shock therapy policies being implemented in Russia, and he's never been held responsible for it.


Let's see if I understand this. Jeff Sachs promoted some program in Russia and lots of people died. Okay, so if he does the same in the 3rd world, then again millions will die? Is that it?

The Anti-Gnostic said...

I lost some respect for Murray Rothbard when I came across him praising Franco. Perhaps a jones for right wing dictators is the love that dare not speak its name among libertarian free market advocates?

Good for Murray. God rest the soul of his servant, Francisco.

Anyway, judging from what emanates from mises.org these days, I think you can stop worrying about nefarious libertarian support for "right wing dictators."

Anonymous said...

Golf clap to the guy who some how managed to introduce University of Chicago, the only guys who really can hold their head high thanks to their success in Chile, into this discussion.

Latin American elites have never been romanticized by the Right. It is the anti-communist rebel groups that have been romaticized at times by the right, mostly because the left always wanted to blatantly sell them out (like in Cuba), or cut their funding (Nicurgua etc.). I mean to the extent anyone is a good guy in Latin America, the "Indian" faction of the Contras was it. All the want was for their land and church to be left alone.


America is helping no one in this dispute, there is no danger of america getting dragged into the conflict and yet Steve is taking sides. Indeed, in South America you can about guess which side Steve comes down because it will be the side burning American flags.

Ron Paul et. al claim that they are sympathetic to the anti-American factions in the Middle East becuase we are occupying their lands and interfering with their governments. Ok, conceded I guess what's the paleoncons excuse in Latin America. It seems to me the real who/whom here is that while Operation Ajax and Operation Moongoose were ok when a Roosevelt was running the show, when the new crew took over all projections of American power became questionable.

Ben Jealous, la Raza, and whoever is running the show on the Indian Reservation (I bet he looks like Will Ferrell) look at whites the same way that Eva Morales looks at the "land owners" why is Morales point of view legitimate and theirs not?


Anonymous said...

The fundamental observation of colonialism is that non-European societies thrive under normal European administration, at least in comparison to their condition under native rule. This observation was obvious during the colonial period. Since, it has only grown more so - at least, to those who can handle the truth.

Moldbug is kind of an idiot. Non-European societies did not thrive under colonial administration, they got relentlessly exploited by their European overlords. The Congo is the most famous example, but look up the Chinese and Indian famines someday. European colonialists were ferociously efficient and organized but they were not in it for charity.

The pro-colonial types want to use the poor record of many of these countries post-colonialism as a demonstration of the success of colonial governance, but that doesn't fly...not only are they ignoring the huge death tolls under colonialism, they are begging the obvious question of why the countries were left in such poor shape.

Eric said...

In the past I would have agreed. But now I am not sure. After all, the well armed conservatives of America have pretty much lost their nation over the past 50 years to a group of folks who never had to use guns.

You have to be willing to exercise power to retain it. Certainly the people running the country don't seem to have any problem with militarized police forces.

David Davenport said...

In my opinion, private cities are a brilliant idea for helping regular people escape the horror of being governed by progressive oligarchs.

...

I don't think cities are immune to this. Didn't families back in Renaissance Italy war and assassinate and engage in intrigue against each other to control cities?


The Old German saying from about 700 years ago was, "Town air makes free." That is, town air defended by strong walls and fighting men.

///////

Manhattan's land value is apparently greater than the value of all the capital equipment in the US

Please explain why Manhattan real estate is intrinsically, immutably valuable.

Things can change. I remember business pundits in the 1990's being awed by hyper expensive Tokyo real estate prices. Don't hear so much about that any more.

So tell us, what is the value of Manhattan to the USA? What is indispensable about New York City?

Anonymous said...

"In the past I would have agreed. But now I am not sure. After all, the well armed conservatives of America have pretty much lost their nation over the past 50 years to a group of folks who never had to use guns."

But government has bigger guns, and if conservatives weren't armed, they would have even less power.
True, pen can be mightier than the sword but only when it controls the sword. Christian West had a powerful faith in Christ but it was backed by the sword. It was not the words of Jesus that freed Spain from the Moors. Jesus inspired but the wars were fought with swords.

Btw, Mao wasn't a militarist and was keen to keep power in his civilian hands and not in the military. He purged Peng Dehuai in the 50s and top generals like He Long during the Cultural Revolution. And when Lin Biao became too powerful, Mao turned on him.

What Mao meant by 'political power grows out of the barrel of the gun' was that violence is necessary to win and keep political power. It didn't mean guns should dictate politics. After all, Mao the communist ideologue fought a long bitter war with military dictator Chiang.

For Mao, ideology and Chinese nationalism mattered most. But he believed that without guns, there would be no political power in any revolutionary struggle.

In the end, it was Mao's putting ideology over guns that kept China backward. The ideological madness of Cultural Revolution undermined the Chinese economy and made it vulnerable to Soviet threats in the late 60s. And it was ideology that led to the failure of Great Leap Forward earlier.

Ed said...

"Honduras, in contrast, has crap geography. It's a small place of little importance with poor access to anywhere more important. The locals aren't very industrious and even if they became more so, this will never be the Pearl River because Honduras is on a narrow isthmus."

This is an excellent point. Honduras with better "human capital" becomes Costa Rica.

This isn't bad at all, from what I know of the three places I'd rather live in Costa Rica than Hong Kong or Singapore (but that is another debate). But is this really worth all the effort?

RoH said...

Trejo may be brave, but how do we know he's not just the Honduran version of Jesse Jackson? Trying to get a payout for his group when he can, without any higher purpose?

Why would Steve have a problem with this? At least when these guys are carrying out their experiment, they're only involving other consenting parties. It may work, it may not, but why have a problem with letting them give it a shot? If they're forcing a bunch of peasants off their land to make it happen, that's a different story but we don't know that.

Anonymous said...

"Things can change. I remember business pundits in the 1990's being awed by hyper expensive Tokyo real estate prices. Don't hear so much about that any more."

Yea, but don't you see that's just a ploy by the Japanese so no foreign developers try to get in on the action or something.

Kind of like how Mr. Sailer really does have a computer business and a 1984 gold medal. Learn to read between the lines slow poke.

NOTA said...

RoH:

Given the track record of academic economists coming down from their ivory towers to dispense their wisdom, some skepticism is warranted. That doesn't mean economisrs are stupid (they're not), or always wrong, but the apparent consensus among smart academic economists of whatever school is currently on top often seems to lead people who follow it off a cliff.

Anonymous said...

Please explain why Manhattan real estate is intrinsically, immutably valuable.

I'm talking about the market value.

Anonymous said...

Ben Jealous, la Raza, and whoever is running the show on the Indian Reservation (I bet he looks like Will Ferrell) look at whites the same way that Eva Morales looks at the "land owners" why is Morales point of view legitimate and theirs not?

Many of the natives were cleared off the lands they had worked for sustenance to make way for plantations, similar to many of the early British settlers who had been or were descendants of those who had been cleared off the land by the English and Scottish land clearances, forcing them to leave. The recent massive Mexican and Latin American migration into the US over the past couple decades has also been driven by peasants being cleared off the land by NAFTA.

Anonymous said...

Eh. There's nothing wrong per se with having a different set of laws an police force in a nation. In fact it's probably beneficial, just has having multiple states and municipalities in the US is beneficial. You're more likely to get an honest police and judicial system on a small scale in a localized area than you are in trying to reform an entire nation. It's not a guarantee that they'd pull it off, but it's better than the alternative.

Honduras has a very high murder rate and there was a surfeit of reasons to whack the lawyer. He was also in court fights with plantation owners.

One of the locations proposed was Puerto Castilla, on the Caribbean side. it has a deepwater port, a bunch of palm plantations, a fishing village, and what look like some malarial swamps. It's not implausible that they could set up a garment industry or some light industrial assembly work there. Another location is already a garment industry hot spot.

DaveinHackensack said...

Steve,

"In Acemoguluism, geography, much less human capital, doesn't matter, as Acemoglu has reiterated in his debate with Jared Diamond."

You make a good point about geography, but isn't an injection of higher human capital implicit in the idea of charter cities? The cities aren't going to be run by the natives, are they? Presumably, competent first worlders will run them (or at least help run them).

Also, trade entrepot isn't necessarily the only viable model here. I mentioned in another thread that, with the right infrastructure and amenities, parts of West Africa might be attractive to European retirees. Why not charter cities there? It could be a win-win-win, for European governments stuck with expensive retiree costs, Northern European retirees who want to retire somewhere warm, and Africans who could use the economic stimulus.

And the charter cities could draw in African economic migrants looking for jobs, which would mean fewer of those migrants trying to get into Europe.

Anonymous said...

"The pro-colonial types want to use the poor record of many of these countries post-colonialism as a demonstration of the success of colonial governance, but that doesn't fly..."

Of course not lol.. the only thing that flies are arguments that fit your theory. Weak...

The fact is that it is next to impossible to decide if Euro colonies were good or bad for the various populations around the world.

I don't know either way but I do know that almost immediately after Euros left their 'colonies' tens of millions of natives followed right behind. And it hasn't stopped since. But yet I am sure this is somehow bad for the oppressed masses.

So primitive and predictable...

sunbeam said...

David Davenport wrote:

"Please explain why Manhattan real estate is intrinsically, immutably valuable.

Things can change. I remember business pundits in the 1990's being awed by hyper expensive Tokyo real estate prices. Don't hear so much about that any more.

So tell us, what is the value of Manhattan to the USA? What is indispensable about New York City?"

Probably nothing.

I'm not sure when it it all changed, as short a time as the early 70's New York and the Northeast in general was a major manufacturing area. Maybe not Detroit or Ohio sheer volume of goods but a major area.

And in a lot of ways it was the intellectual hub, actually the very hub of the US up to the 60's maybe.

Remember Feynman and a host of other great scientists came out of New York. Sometime in the 60's it seems like most of the science and math guys started coming from somewhere else.

I'm sure they still move a ton of freight through it, but it also used to be the major shipping hub of the US. Now other areas that are totally obscure and move containers probably move most of it.

New York has always been a major financial center. They still have that, and the fashion designers, not to mention being the print media hub.

But how important is that now? Whatever anyone's opinion of the blogosphere, if the pundits and literati disappeared tomorrow, rather quickly others would take their place.

I think it would be the same for fashion.

And if you believe as I do, that modern finance is pretty much about gaming the system for the benefit of the financiers, forgetting such humdrum things as raising capital for new business ventures, then what do you really lose if they go belly up?

Most of us remember the world prior to the deregulation and bank mergers quite well. Whatever advances we have made since then, I don't think any of this financial stuff has helped anyone do much of anything.

Except to make a bunch of FIRE people rich. Other than that it was a total waste of time.

Not addressing a tragic loss of life, but if New York disappeared tomorrow, what little truly useful functions it still satisfies would be quickly taken up by others.

This isn't the New York City of about 1900 to 1970. I can't think of any innovation or well anything that has come out of that city in a long time.

My two cents.

Anonymous said...

There was a good article in The New Yorker last year about an assassination/suicide of an attorney in Guatemala:

http://www.newyorker.com/reporting/2011/04/04/110404fa_fact_grann

Anonymous said...

http://www.youtube.com/watch?v=dIqGUpNggKg

Swedish Siberiade. All time great film.

Whiskey said...

As noted in the Financial Times, Franco refused Hitler transit through Spain (though he was quite useful in other areas) to seal off the Med. Thus kept the British in the fight, still (something Spain since the rise of France had practiced) and if the Republic had won, the Communists then allied 1939-June 1941 (gee what happened then?) would have rolled over for Hitler. I am sympathetic to a degree to Franco, who at least had a vision of "small" Spain of the old ways, as confining and often nasty as that vision of rigid, class-driven Catholicism could be, it was better than the garbage the "New Men" ... Mussolini, Hitler, and Stalin all pumped out. Franco had no pathetic, neo-pagan, neo-Roman fantasies like those, just Spain as it had always been. Of course holding it so close crushed it completely.

As far as the University of Chicago/Harvard goes, they really do believe their own BS, and have no connection to reality. At least in times past through War and exploration, academics had any fantasy of live according to theory in neat equations knocked out of them ... by seing buddies blown apart left and right, or arrows sticking into admired leaders, and the like. Academics are never required in their life to admit to anything but theoretical abstractions and remove themselves from the messiness inherent in life.

Yes they believe it. Like sheltered children clapping for Peter Pan.

As for Colonialism, its not all of one case. The Congo was a house of horrors, on the whole India was a better place under the Raj than before it: far less suttee, Thuggee, infanticide of girls, and the like which the British suppressed, as they did inter-communal violence. Meanwhile those "nice" Belgians ran the Congo like a 19th Century out-take of an Eli Roth splatter-fest. While the "bad" Spanish and Portugese mostly left the interior to its own devices and left some schools and infrastructure on the coast in Africa and leaving in the Americas at least the theory of rule of law, written constitutions, lawyers, legal redress, etc. Cortez died not on the battlefield but filing lawsuits and defending against them.

The worst of all colonialists of course were the Japanese who were so brutal and hated in Korea that today the South Koreans probably prefer the Chinese to Japan.

Whiskey said...

Private Cities are going nowhere, because capturing the State and using it to dole out goodies and crush those of your enemies is the whole purpose of politics outside the US/Britain say 1790-2008.

Why would any elite that has seized governmental power allow an alternate, and challenging power center to emerge? The only way you can get that is if the government and people are so debased that they cannot mount an effective challenge: Somalia, perhaps Libya, a few other places. Anywhere else, the government i.e. the in-power elites will never allow that.

Auntie Analogue said...

Charter cities? For goodness' sake, I know plenty people who have enough trouble with Charter cable-TV!

Mr. Anon said...

"It's a no-brainer."

God, I hate that phrase. It has to be one of the most annoying cliches spoken by smug SWPLs - that and "going forward". Any decision that does not require a brain is probably a bad decision.

Romer's plan is idiotic, but it's no different in principle than official US policy in Iraq or Afghanistan, or any of the other myriad nations whose business we stick our noses into. As near as I can tell, our policy in Afghanistan is to turn them all into good little jeffersonian democrats - like the people in Norman Rockwell's painting of a 1940s town-hall meeting - and chain-gun the ones who won't get with the program.

DaveinHackensack said...

"Please explain why Manhattan real estate is intrinsically, immutably valuable."

It's neither intrinsically nor immutably valuable; it's valuable because Manhattan is now a nice place to live. In the 1970s, it wasn't such a nice place to live. I know someone who bought a two bedroom apartment then for under $15,000. Today the same apartment would probably sell for over $1 million.

"
This isn't the New York City of about 1900 to 1970. I can't think of any innovation or well anything that has come out of that city in a long time."


Google (which has a huge local office in Manhattan's Chelsea neighborhood) is your friend.

Anonymous said...

The biggest 'institution' in Latin America has always been the Roman Catholic church, being perhaps the only 'instsitution' that actually had a grip on and the loyalty of the vast majority of Latin Americans, an 'institution' that was supposed to regulate every detail of its adherents lives - from honesty and morality to relations with others.
Say what you will be about the Catholic church, but it's rather strange that in states such as Austria, Bavaria and other places throughout Europe, Catholicism was associated with well-run, well-ordered successful states, (yes, I know about southern Europe), whereas its teachings (murder is wrong, theft is wrong, charity is a virtue etc), seem too have had zero effect on Latin Americans.
And, by the way, Catholicism being rigidly hieriarchical and centralized, is, (or should be), exactly te same in Guatemala as it is in Luxembourg.

Anonymous said...

Strange as it seems, with England always being thought of as a hardline protestat nation, England was a Catholic nation (and a devoutly Catholic nation) for nigh on a thousand years.
John Knox, the firebrand leader of the reformation in Scotland started life as a Catholic priest.

dearieme said...

If economists wish to establish a reputation for honesty, they could start by giving up the pretence that their Swedish Central Bank prize is actually a Nobel prize.

Anonymous said...

"Manhattan's land value is apparently greater than the value of all the capital equipment in the US. It's easy to imagine ambitious men engaging in violence to capture this if the gov't had less of a monopoly on violence in the US." - that land value would plummet if they had to worry about 3rd world levels of violence.

"The pro-colonial types want to use the poor record of many of these countries post-colonialism as a demonstration of the success of colonial governance, but that doesn't fly...not only are they ignoring the huge death tolls under colonialism, they are begging the obvious question of why the countries were left in such poor shape. " - Take a look at life expectances during and after colonialism especially for africa(I haven't seen the india/china data, but then again Norman Borlaug pulled their asses out of the fire bigtime anyway). Things were getting better for the common man on the street, as long as he was willing to accept being a second class citizen of course.

bjdubbs said...

"Non-European societies did not thrive under colonial administration, they got relentlessly exploited by their European overlords. The Congo is the most famous example"

In the Footsteps of Dr. Kurtz is a good book about what happened in Congo after the colonialists left. In short, things really went downhill. After Mobutu essentially threw out whites through nationalization, the country went into complete breakdown, almost overnigh. The people said "when are the whites coming back? When is the inventory going to be restocked?" Mobutu later had a Belgian son in law who comically proposed all sorts of great business and tourism opportunities to Mobutu, who was slowly being sucked dry by all the patronage. But Mobutu wasn't interested.

Anonymous said...

So who's going to run the 'institutions' in these modernday 'free' Hansa' cities?

Is it going to be native 'clean' and 'well educated at western colleges' Hondurans or is it going to be imported western 'experts'?

How long will it be before the word 'apartheid' starts to be bandied about?

Anonymous said...

Yup.
Jeffrey Sachs is the moral equivalent of a war criminal, make no mistake literally millions of the blameless suffered and died because Russian (corrupt) politicians were dumb enough to fall for his particular brand of dog-shit (aided by the usual suspects at the WSJ and 'The Economist', of course).
Now you wonder why (not forgetting the blow-up of 2008, when the 'smart' people insisted we were in the 'nice' decade), why some of us here hold 'economists' in such utter, utter contempt.

Silver said...

Moldbug is kind of an idiot. Non-European societies did not thrive under colonial administration, they got relentlessly exploited by their European overlords. The Congo is the most famous example, but look up the Chinese and Indian famines someday. European colonialists were ferociously efficient and organized but they were not in it for charity.

The pro-colonial types want to use the poor record of many of these countries post-colonialism as a demonstration of the success of colonial governance, but that doesn't fly...not only are they ignoring the huge death tolls under colonialism, they are begging the obvious question of why the countries were left in such poor shape.


That's all excused though, because supposedly they had "order" back then. That's about the only thing that excites that autocratic blowhard Moldbug.

The fact is the world is a vastly more pleasant place today for the average citizen of L. America and most of Africa than it was 100 years ago, and the trend is towards getting more pleasant, not less pleasant, despite what the IQ fetishist doomsayers keep telling you. (It's not that IQ is unimportant, it's that IQ fetishists don't actually know how important it is but constantly present it as the most important factor in any and all contexts, as though they absolutely knew for certain it was and knew for certain precisely what it implied. What a joke.)

I really don't get why Sailer is being so cynical and sarcastic. It's not a wholly unreasonable plan. Just because they failed to execute it this time doesn't mean they can't learn their lesson, regroup and try again. And why should they announce it's "colonialism"? How would that help with the launch?

Silver said...

How long will it be before the word 'apartheid' starts to be bandied about?

(a) Who cares? (b) It'd be a good opportunity to open up a debate on the alleged evils of apartheid. (c) Got something better to do?

Steve Sailer said...

"I really don't get why Sailer is being so cynical and sarcastic."

My objection is the assumption that there is some sort of high-IQ way around politics, that you can have land policy based on advanced theory without politics. No, it's always going to be What's in It for Me? And Whose Side Are You On? It has to be like that. Smart people can occasionally come up with some Pareto optimization schemes, but mostly it's very real interests clashing.

Anonymous said...

My objection is the assumption that there is some sort of high-IQ way around politics, that you can have land policy based on advanced theory without politics.

Yes. Every chain of land title goes back to a grantor who originally seized the land by force. The basis of war is control of land and being able to kill those on it or to charge them rent.

http://cooperativeindividualism.org/gaffney-mason_rent-seeking-and-global-conflict-2006.html

"National governments originate historically to acquire, hold and police land. Other functions are assumed later, but sovereignty over land is always the first business. Private parties hold land from the sovereign: every chain of title goes back to a grantor who originally seized the land.

When economists today speak of "rent-seeking" they usually are thinking not of basic land rent, but in subtle and sophisticated terms, looking at dribs and drabs of transfer rent derived from contracting advantages. They develop abstract models for gaming optimally with imperfect information, and so on. By emphasizing the arcane while ignoring the basic they are in danger of matching the proverbial expert who fine-tunes all the details and elaborations as he forges on to the grand disaster."

"We would be more useful to statesmen if we looked first at rent-seeking in the grosser sense of "land-grabbing", where the whole bundle is at stake. When William of Normandy conquered England the prize was land rent, all of it. He and his retainers dispossessed the local rent-collectors. It was simple, gross, and basic, and much more consequential than the trivial rent-seeking we model today. The bulk of the natives may have been affected only marginally: they just paid Lord B instead of Lord A. But it made all the difference to Lords B and A, the ones who made basic decisions about global conflict and cooperation.

Again, from the 17th century Europeans invaded North America, dispossessed the natives and each other, until today we meet here, overlooking beach and ocean, paying our daily rent for a little slice of land which has been won and kept by a long chain of wars."

neil craig said...

On balance I would say that economists like Krugman who spend their time saying why it is a fine thing for our own political masters to kite cheques and subsidise their friends in the windmill industry to do a bit of soul searching.

Anonymous said...

Academia never understands the power of history. The neo-cons thought they could go into Iraq and "create the conditions" for corporate prosperity. The Left thinks they can go in and "create the conditions" for socialist utopia. Rule #1: you can never create conditions! The conditions have been created for thousands of years of history. The neo-cons ran into all the ancient grievances between the groups in Iraq, and now Romer finds out that history can't be ignored in Honduras.

Reminds me of when the United States decided to split Kosovo off from Serbia and give it to the Albanians it set off riots throughout Serbia. The Serbians see Kosovo as the heartland of Serbia based on the Battle of Kosovo in 1389 where Serbs battled the Ottoman empire and lost. The battle has ever since been a source of great national patriotism for Serbs. In response to the riots, Condoleeza Rice urged the angry Serbs to get over it. "I mean, after all, we're talking about something from 1389 - 1389! It's time to move forward."
The Serbs could have replied that African-Americans should get over slavery.
Or that Jews should get over the holocaust, or those at the Wailing Wall should get over the destruction of the temple, or that they should get over being slaves in Egypt.
Or that the 3rd world should get over imperialism.
Or that the United States should get over the American Revolution, or World War 2.

For all people, their history is their identity, it is what makes you who you are. There is no getting over history.

Silver said...

For all people, their history is their identity, it is what makes you who you are. There is no getting over history.

But history isn't something that "just happens." People, and the actions that they take (or, sometimes, don't take), make history; and the actions they take are usually guided by the thoughts they think, which are influenced by history, but not determined by history, because history can often be interpreted in very different ways. We're not prisoners of the past! (At least I'm not!)

Dan Kurt said...

re: "Isn't it about time for economists to do some soul-searching and collective self-criticism? " SS

Just as Accounting (except for cost accounting) is Tax Collecting, Economics (except for Mises) is giving cover for Government Tyranny.

Poor professor Romer bet on the wrong horse.He apparently believed the myth that the Mestizos have a chance against the "Castilian" upper class in Latin America. The IQ gulf between the two classes makes a fool out of anyone who backs the Indian-White hybrids.

Dan Kurt

Anonymous said...

"Isn't it about time for economists to do some soul-searching and collective self-criticism?"

Uhm, no? That would go against the whole point of being an economist. Being an economist means never having to say 'I'm sorry'.


Fucking things up is a feature not a bug for economists.

Anonymous said...

And if you believe as I do, that modern finance is pretty much about gaming the system for the benefit of the financiers, forgetting such humdrum things as raising capital for new business ventures, then what do you really lose if they go belly up?

Translation: "What I don't understand can't hurt me."

Anonymous said...

Actually, the Anglo-Saxons were a sight worse off under the Normans than they were before the conquest.
The bulk of the English population were bonded peasants before and after the conquest, true enough, but the Normans introduced some onerous elaborations - such as the requirement that peasants were required to do a ceratin number of days forced labor for their Lord on building projects etc.
Most of England's many castles were built this way, by forced labor. The English word 'graft' meaning 'hard work' comes from that part of a castle's defence called a 'graft'.

Alfa158 said...

Anonymous said...
"Here's Romer's 2011 TED talk.)"
Is it just me or to ted talks = the audience and speakers - come across as smug, with an extraordinary amount of hubris, but in reality just dumb-pc-makes-you-stupid malcolm gladwellish conformists trying to perpetuate their political class.

Yes, you nailed it! Most of the attendees and speakers are practically walking parodies of themselves. At the last one I went to one of the subjects was about people being and open and communicating with each other, and during the discussion one of the attendees with a total lack of irony went into a hilarious rant about how his "arch-conservative" brother-in-law refuses to listen to reason. Despite the lack of self-awareness of the typical TEDista I still like going. There are scattered kernels of interesting thought in the chaff. Unlike the typical attendee I try to avoid hanging out only people who agree with me and enjoy stepping into a Tom Wolfe novel. And to be honest, my local group puts on a great spread of high end wines, beer and snacks for cheap. Beats any bar Happy Hour.

pat said...

Romer it seems to me gets it exactly backwards. He says that half of the people in somewhere or other don't have even one city to welcome them.

Good!

A major if not THE major problem worldwide is the influx of rural peasants into cities. That's the crux of our illeagal immigration debate. That the problem with Detroit. Those black field hands that came north in the Great Migration have not acquired the skill sets appropriate for city life. And peasants are in over supply everywhere. The dark side of the "Green Revolution" is that machines and genetically engineered crops have made peasants obsolete. Mexico wants to rid itself of their excess people. So do so many African countries.

There is no place in modern cities for illiterate dirt farmers. We should build walls everywhere to keep them where they are and hope an answer emerges.

The developed nations underwent a demographic adjustment and most now have falling native populations. If the third world peasants are ever going to also have such an adjustment it will not be hastened by their residing in the cities of Western welfare states.

La Griffe du Lion's model of development fits the data very well. Just square the correlation and you get a measure of explained variance. There is always some residual unexplained variance so the obvious conclusion is that there just isn't much if any room for any other explanation other than the IQ of the population. Lion's model is quite simple - the proportion of the population that score above 106 on the verbal part of aptitude tests. Brains make wealth. Period. No need for econometric models and no room in the property space.

Sub Saharan Africa's black populations - the model predicts - are too stupid for serious economic development. That's a little harsher than many will find comfortable, but it's proven valid so far. The same is true for Honduras.

If the problem is the population the Charter Cities notion simply won't fly. Bet on continuing poverty in Central America and black Africa.

There are really only two options that make any sense: wall off the high IQ north from the low IQ equatorial nations; and re-colinization. South Africa has many natural advantages but is beset with an inferior population. Replace the blacks with Chinese colonists and like the Israelis making the desert bloom, the African bush will bloom. Honduras'relative place in the world won't change if its popultaion doesn't change.

As for the value of Manhatten real estate, it's a function of the population's IQ too. Detroit real estate was once worth a lot, but real estate covered with low IQ unemployed people is worth nothing. John Carpenter's Escape from New York is a case in point. The nightmare sets of that film look a lot like real life Detroit today.

In 1940 the government asked the Big Three to produce 75,000 tanks a year. We had fewer tanks at that time than Poland. They did, and we won that war. We couldn't do that today. Detroit has been destroyed - not as we all expected in the fifties by nukes - but by it's excess peasant population.

Romney is wrong our economic problems are not important because we know the solutions. No one knows what to do about Detroit.

Albertosaurus

Silver said...

Poor professor Romer bet on the wrong horse.He apparently believed the myth that the Mestizos have a chance against the "Castilian" upper class in Latin America. The IQ gulf between the two classes makes a fool out of anyone who backs the Indian-White hybrids.

What bullshit. Straight from the "I know a few secrets about race therefore I'm qualified to comment knowingly about everything on this planet" school.

Dutch Boy said...

Isn't it about time for economists to do some soul-searching and collective self-criticism?

Ha, ha,ha, ha, ha, ha, .........
This will happen when shrimp whistle.

On another note, empires are not charitable institutions, they are created for exploitation.

ATBOTL said...

"Latin American elites are not infrequently romanticized by the Right but many of them are more like Italian mafia dons rather than nice, respectable people."

Remember disgraced Mexcican ex-Presidente Carlos Salinas? The WSJ wrote about him like he was the second coming of Christ.

We never here any mea culpas from the establishment right, no matter how spectacularly or embarrassingly wrong they are. They have no shame.

ATBOTL said...

"By the way, 'death squads' is part of leftist terminology. Notice the left never referred to leftist mass murderers as 'death squad'. It was always 'rightwing death squads'. Since Che Guevara said leftists should be 'killing machines', we should refer to leftist murderers as 'leftist killing machines'."

No, it's an accurate term. There is zero benefit to defending these types or minimizing their crimes in any way. The "right" Latin America are evil people very much along the lines of Bush/Cheney. We don't have a dog in that fight.

Mencius Moldbug said...

I think this comment speaks for itself - I just want to highlight it:

Moldbug is kind of an idiot. Non-European societies did not thrive under colonial administration, they got relentlessly exploited by their European overlords. The Congo is the most famous example, but look up the Chinese and Indian famines someday. European colonialists were ferociously efficient and organized but they were not in it for charity.

The pro-colonial types want to use the poor record of many of these countries post-colonialism as a demonstration of the success of colonial governance, but that doesn't fly...not only are they ignoring the huge death tolls under colonialism, they are begging the obvious question of why the countries were left in such poor shape.


Some people, apparently, think they can just, like, stroll out of Plato's cave.

My advice is to buy a Victorian encyclopedia - they are actually quite cheap. I have Chambers', 1876, ~15 volumes. The cool thing about a Victorian encyclopedia is that once you've read through it, you can go back to the start and start reading again. It will remain interesting, as you pick up on things that made no sense to you the first time around.

Or, you could keep getting your Victorian history from Mike Davis. Which is sort of like making Alfred Rosenberg your personal advisor on the Jews.

Anonymous said...

Honduras has too many peasants?

How about birth control?

Just pay them to get sterilized after the first baby.

At $1000 per woman, it would still be a bargain because they wouldn't be coming here.

Anonymous said...

Academia never understands the power of history. The neo-cons thought they could go into Iraq and "create the conditions" for corporate prosperity. The Left thinks they can go in and "create the conditions" for socialist utopia. Rule #1: you can never create conditions! The conditions have been created for thousands of years of history. The neo-cons ran into all the ancient grievances between the groups in Iraq, and now Romer finds out that history can't be ignored in Honduras.

It is so true.

They all want to play God.

They want to start fresh with a blank slate!

Like they think they can just erase what the people know and believe.

Why are the educated so damned dumb?

Silver said...

Sub Saharan Africa's black populations - the model predicts - are too stupid for serious economic development. That's a little harsher than many will find comfortable, but it's proven valid so far. The same is true for Honduras.

I'd say that depends on what you mean by "serious" economic development. I have a funny feeling you mean by it any economic development. But that's just daft.

Look, Honduras's IQ is supposedly 84, the same as Panama's. Panama, only some 25% richer in the early 1950s, is now over three times as rich as Honduras. Applying your logic one would have looked at Panama in 1955 and declared, nope, these folks are too stupid for any serious (ie any) economic development, this is about as good as much as can be expected from them. How very wrong you would have been. Well, if that was wrong then, perhaps the same is wrong today with respect to Honduras. And perhaps the same is wrong with respect to sub-Saharan Africa.

The real question isn't (or shouldn't be) whether Africa is fit for any "serious" development, but whether it's capable of further development at all. That's what will lift the spirits of Africans, mere development, not "serious" development. And the answer must be that yes, they are capable of further development. Roughly three of four sub-Saharan countries are economically better off today on a per capita basis than in 1960. That's more impressive than it seems when you factor in their furious rate of population growth, often over 3% per annum -- population growth so rapid that just the fact that the economy kept pace with population growth (since children don't contribute economically) can be considered impressive. As their population growth tapers off (and it has begun to do so, ever so painfully slowly, but still) more of that growth will translate to per capita wealth, so even with little else changing their lives will improve. How far -- to what degree -- will they be able to develop? I would not like to guess, but I think it's almost a given that they could reach a level of $5000-$6000 over the course of this century, which is incredibly meager in western eyes, but a tremendous lift from an African perspective. Perhaps the best thing western commentators could is help Africans see this is a gain, rather than continue to given Africans reason to feel envy and indignation.

peterike said...

Off-topic but not really. Howard Stern interviews Harlem residents about Obama. Hilarity ensues.

http://realclearpolitics.com/video/2012/09/24/howard_stern_interviews_obama_supporters_2012.html

Worth a post on its own, I'd say.

Anonymous said...

"This isn't the New York City of about 1900 to 1970. I can't think of any innovation or well anything that has come out of that city in a long time."

Google (which has a huge local office in Manhattan's Chelsea neighborhood) is your friend.


That may be, but Google did not come out of Manhattan. Nor has much else of note.

C. Van Carter said...

"Non-European societies did not thrive under colonial administration, they got relentlessly exploited by their European overlords. The Congo is the most famous example"

The Congo is an example.

Anonymous said...

Academia never understands the power of history. The neo-cons thought they could go into Iraq and "create the conditions" for corporate prosperity. The Left thinks they can go in and "create the conditions" for socialist utopia. Rule #1: you can never create conditions! The conditions have been created for thousands of years of history. The neo-cons ran into all the ancient grievances between the groups in Iraq, and now Romer finds out that history can't be ignored in Honduras.



It's not just history. Both the socialist and the libertarian theorists are unable to wrap their heads around the fact that human nature is not what they think it is. People are more - much, much, MUCH more - than a collection of economic impulses.

I'm surprised that nobody has mentioned Simon Bolivar yet. His dream was to re-enact the American Revolution in Latin America. He drew up American-style constitutions. He attempted to create the "institutions" which some modern economists think creates wealth. And he failed, bitterly commenting that "All who served the Revolution have plowed the sea".

Peoples create institutions and wealth. Some peoples create great institutions and great wealth, other peoples create lessor institutions and lessor wealth. But whatever creating is done is done by "the people" as a body, never by some individual person with big theories.

peterike said...

Roughly three of four sub-Saharan countries are economically better off today on a per capita basis than in 1960.

I suspect this is largely a factor of increased natural resource wealth extraction, lately driven by China. A few natives at the top get rich off it, and it drives up "per capita" numbers, but I suspect the vast majority get no benefit whatsoever.

Also, as the global economy continues to skid, Chinese manufacturing will decline, less resources will be needed, and African GDPs will slide again.

Anonymous said...

Strange as it seems, with England always being thought of as a hardline protestat nation, England was a Catholic nation (and a devoutly Catholic nation) for nigh on a thousand years.


Strange as it seems, England was not a hard-line Protestant nation even after the Reformation. That's why it "encouraged" the actual hard-line Protestants, the spiritual offspring of John Knox - the Puritans, the Quakers, the Presbyterians, etc - to sail thousands of miles away to the New World.

Anonymous said...

Romer was naive, but I think the basic idea is right. The question though is how to cut the chord with the powers that be in these lousy 3rd world cities.


I think the "basic idea" was the same old liberal idea: that people are fungible, that people are all basically the same, that if the people in country A are poor and the people in country B are rich, that this tells us nothing about the people in these countries and everything about their "elites" and "institutions".

There are cases where this is true. Some peoples who were perfectly capable of building a decent culture for themselves have been subjugated and oppressed by more powerful neighbors. There are plenty of such examples in European history.

But it does no follow that this applies everywhere. The indigenous population of the America's, North and South, were scarcely past the Stone Age when the Europeans arrived in the 16th century. Five hundred years later the indigenous population of the America's, now usually labeled "Hispanic", remains utterly incapable of sustaining a European-style civilization.

If some freak plague killed off all the people in the world of European ancestry, the remaining people living in North and South America would sink rapidly back into barbarism.

Anonymous said...




Look, Honduras's IQ is supposedly 84, the same as Panama's. Panama, only some 25% richer in the early 1950s, is now over three times as rich as Honduras. Applying your logic one would have looked at Panama in 1955 and declared, nope, these folks are too stupid for any serious (ie any) economic development, this is about as good as much as can be expected from them. How very wrong you would have been. Well, if that was wrong then, perhaps the same is wrong today with respect to Honduras.



What in the world.

Hello, anyone home?

Panama should be 100 times richer. They have the freaking Panama Canal!!!!

You know the one you go through so you don't have to sail around the tip of South America.

Yeah, that Panama Canal. The one where you have to pay your transit fee in gold in advance.

Yeah, that Panama Canal. You mean Honduras has one of those? Really?

Yeah, didn't think so.

Anonymous said...

"Roughly three of four sub-Saharan countries are economically better off today on a per capita basis than in 1960."

Translation: 3 of 4 sub-Saharan countries have per capita GDP equal to about 1/3 the per capita GDP of medieval Europe.

So the Dark Ages were about 3 times rosier.

So, yeah, when you are at the bottom, only way is up.

Anonymous said...

Poor professor Romer bet on the wrong horse.He apparently believed the myth that the Mestizos have a chance against the "Castilian" upper class in Latin America.

I think the guys pushing the charter cities idea and bringing Romer on board were the upper class.

Anonymous said...

He apparently believed the myth that the Mestizos have a chance against the "Castilian" upper class in Latin America.

Do ordinary American yeoman types have a chance against these Latin American elite types? They seem a lot better at wealth centralization and political intrigue than your average middle class American.

Anonymous said...

Just as Accounting (except for cost accounting) is Tax Collecting, Economics (except for Mises) is giving cover for Government Tyranny.

Misesian economics requires government.

Anonymous said...

The dark side of the "Green Revolution" is that machines and genetically engineered crops have made peasants obsolete.

It isn't about obsolescence. Rent-seekers have always been obsolete by definition. They extract rent generated others. It's about politics.

Anonymous said...

Poor professor Romer bet on the wrong horse.He apparently believed the myth that the Mestizos have a chance against the "Castilian" upper class in Latin America.

The charter cities would have given even more power to the upper class who would own these cities and the monopolies in them.

Anonymous said...

The worst of all colonialists of course were the Japanese who were so brutal and hated in Korea that today the South Koreans probably prefer the Chinese to Japan.

Objectively, the Japanese weren't very brutal in Korea. The Koreans of course will say otherwise, but it was nothing like colonization in Latin America or Africa.

China never colonized Korea. Korea was a vassal or tributary to China at various times, similar to its relationship with the US today.

Chris said...

Sunbeam said:

""This fiasco resembles a miniature version of how the Harvard econ department helped provide intellectual air cover for budding oligarchs stealing much of the assets of Russia in the 1990s. Isn't it about time for economists to do some soul-searching and collective self-criticism?"

That is the result, but I'm curious as to whether that is actually the design, or just a side effect.

In other words does the Economics Department of the University of Chicago truly believe in what they say, or is it all some kind of cynical game?

I really can't tell. I'd tend to think they are all true believers, but wouldn't be surprised to find out otherwise.

BTW, I just said the econ department at the University of Chicago as an indicative example because they are quite famous. You could plug in lots of people, lots of other organizations, from all around the world that say the same kinds of things."



I have been studying this precise question for a while. Most economist are ideologues (which is actually pretty normal considering we are all human) and rarely question their own conclusions or findings (another human trait). These economists (you can also replace with academics, politicians, etc.) are then used as "useful idiots".

A case in point is Paul Krugman, we will not know whether he is right or wrong till many years from now when, future results will be compared to the present prediction but, regardless, his viewpoints and pandering are used by the various people to push their own agenda. Essentially he is a "useful idiot" whether or not he is right or wrong. Now replace Paul Krugman with Housing Bubble economist, or intelligence analysts in 2002 and you start getting the picture.

I have read Janine Wedel's books on Poland's privatization and I remember watching a documentary on this topic and how giddy and excited Jeffrey Sachs was to bring "capitalism" to eastern europe and russia. He just had the perfect giddy little smirk of a useful idiot. He will never admit it but, it's pretty obvious he was used like a 43 year old hooker's ass. He has no incentive to admit it either, he was promoted and distinguished with many "honors" over the years, confirming his "useful idiot" status in society.

Its fairly obvious to see that the economics profession is not the only one that is susceptible to this phenomenon, and that this phenomenon is really a pattern of human nature that keeps repeating. Humans are social animals and we also have a brain that has evolved with certain cognitive biases and dissonance that we are unable to take into account and adjust for either on an individual or society wide level. In essence we are fucked, "we have met the enemy and he is us".

master_of_americans said...

Perhaps Steve is the one who is being na├»ve here. Trejo was killed because he lives in a country that doesn’t enjoy consistent rule of law. Romer’s effort is fundamentally to impose a different legal system onto part of that territory. It doesn’t have to be perfect, or even up to U.S. standards, to be a significant improvement. For good or ill, the plan is at heart an audacious one: to revise the international practice of sovereignty. The fact that there are fits and starts getting it off the ground is not surprising. The real question is whether it could be made to stick is more relevant (i.e., if the city is built and then Honduas decides to revoke the charter, can the city say no). It is of course necessary for Romer to sound PC and play the useful idiot – if he says what he’s doing clearly he’ll have UN peacekeeping forces down on him before the project ever gets off the ground.

Anonymous said...

"Look, Honduras's IQ is supposedly 84, the same as Panama's. Panama, only some 25% richer in the early 1950s, is now over three times as rich as Honduras. Applying your logic one would have looked at Panama in 1955 and declared, nope, these folks are too stupid for any serious (ie any) economic development, this is about as good as much as can be expected from them. How very wrong you would have been. Well, if that was wrong then, perhaps the same is wrong today with respect to Honduras. And perhaps the same is wrong with respect to sub-Saharan Africa."

From wikipedia:
"Revenue from canal tolls represents today a significant portion of Panama's GDP."
If every nation had a canal, that would not be the case, they enjoy a fairly hefty monopoly though, and can benefit from it.

cooking with tyler cowen economics said...

truly a sad day for a future of cargo containers filled with cheap, semi-frozen, resently fresh, chalupas. sniff.

kurt9 said...

Discussion on seasteading and charter cities.

http://athousandnations.com/2009/08/10/seasteading-and-charter-cities/

I think most of you (including our host) is missing the key point in all of this. The idea is to create a meta-system of competitive governance, similar to the free market in industry. We all know that competitive marketplaces yield better products and services for lower prices than monopolistic situations. The current set-up of governments resembles a monopolistic situation. A more competitive market in governance ought to lead to improved governance.

Cail Corishev said...

"Roughly three of four sub-Saharan countries are economically better off today on a per capita basis than in 1960."

How much money does the West dump into those countries every year to atone for white liberal guilt again?

Hand me a thousand dollars, and I'll be economically better off than I was yesterday too.

Cail Corishev said...

Has anyone written anything about what level these societies were at before colonization, and theorized about where they'd be now without it? I've wondered: if Europeans had landed in West Africa and said, "Ugh, this jungle sucks. Back on the boat men; we're never coming here again," what would those countries be like today? Would they have roads? Would they have developed gunpowder? Indoor plumbing? Dentistry?

Seems like it'd be an interesting study.

sunbeam said...

kurt9 said:

"Discussion on seasteading and charter cities.

http://athousandnations.com/2009/08/10/seasteading-and-charter-cities/

I think most of you (including our host) is missing the key point in all of this. The idea is to create a meta-system of competitive governance, similar to the free market in industry. We all know that competitive marketplaces yield better products and services for lower prices than monopolistic situations. The current set-up of governments resembles a monopolistic situation. A more competitive market in governance ought to lead to improved governance."

Communists get rapped pretty hard for ignoring human nature. I've always thought Libertarians deserved the same criticism.

Let me ask you something. Is there anything more rational, if you are competing in a competitive market, than to take steps to make it not competitive? To attain a monopolistic position any way you can swing it?

To make this sort of system work, you are going to need a government at least as strong, at least as obtrusive as the one we have now. Just to make sure the markets stay competitive.

Government would still take a princely share, but the benefits of just about everything would flow to only a few.

I'll give you this, if you had a small community of true believers like the Pilgrims or maybe the crew Jim Jones took into Guyana, you could make it work on a small scale.

For a while.

But make it too big, or have an insufficient fraction of people who are willing to sacrifice to make this system work as theoretically intended, and it will blow up in your face.

You are asking for idealism and self sacrifice, without offering the support and belief system that makes this possible.

Libertarians have a set of beliefs, but it is weak sauce compared to what religion, for example, gives people. And I don't think Atlas Shrugged or The Fountainhead will ever inspire the devotion it takes to get people to risk death to carry that flag.

Of course these tomes will inspire people to be perfectly willing to let other people enter the province of danger, physical suffering, and death. But there is a ceiling on how much that will accomplish.

You might be tempted to fantasize about being a merchant prince, but earlier generations of this knew exactly how dangerous mercenaries were without a strong national government to backstop you.

To quote a certain writer of the pulp era: "Hither came Conan, the Cimmerian, black-haired, sullen-eyed, sword in hand, a thief, a reaver, a slayer, with gigantic melancholies and gigantic mirth, to tread the jeweled thrones of the Earth under his sandalled feet."

Okay, I could write more than you could imagine critiquing libertarianism. I think it is a belief system that has more in common with the tooth fairy than Realpolitik.

Eric said...

Sub Saharan Africa's black populations - the model predicts - are too stupid for serious economic development.

That's pretty funny in light of the fact that Sub-Saharan Africa has been booming for the last decade.

In any event, eventually East Asian labor will be too expensive to use for manufacturing and the Apples and Nikes of the world will start making products there.

Anonymous said...

The current set-up of governments resembles a monopolistic situation. A more competitive market in governance ought to lead to improved governance.

That's because government is based on monopoly - a monopoly on violence.

Dan Kurt said...

re: "Do ordinary American yeoman types have a chance against these Latin American elite types? They seem a lot better at wealth centralization and political intrigue than your average middle class American." ANON 9/25/12 12:50 PM

Story follows:

I met a man in the 1970s who was the son of an Oil Man who worked for Royal Dutch Shell during the 1920s and 1930s in Venezuela and Brazil. This man had been a boy then and grew up in Northern South America. I believe the incident described below was in Venezuela but it could have been Brazil.

As he told me the story, once he saw a well dressed, handsome man who was doing business with his father and the boy noted a special button or badge on his lapel. Later the boy asked his father about the item. His father said that that emblem represented that the man had killed a Jaguar himself with just a knife. It also told the world that the man was not to be trifled with.

Years later after the son, mother and father returned to NYC during the depression and the son was approaching manhood the father told him more about the man who had killed a JAGUAR with a knife. He said once the man had by chance entered a room in which there was another man whose wife the Jaguar killer was having an affair. The husband knew that he was being cuckolded by the Jaguar killer. Without a pause the Jaguar killer proceeded to kill his paramour's husband then and there.

The Jaguar killer was not prosecuted as in that strata of the country it was the duty of the cuckolded husband to kill the man who shamed him thus the Jaguar killer was justified in killing the husband. He was never prosecuted.

The Jaguar killer represents the nature of the "Castilian" Latin American elites. They are as tough as nails.

Dan Kurt

Mr. Anon said...

"pat said...

In 1940 the government asked the Big Three to produce 75,000 tanks a year. We had fewer tanks at that time than Poland."

In 1940, Poland was part of the third reich. The tanks there were german. I find it difficult to believe that Poland - a nation that still fielded offensive calvary in 1939 - ever had more tanks than did the US.

ATBOTL said...

"Do ordinary American yeoman types have a chance against these Latin American elite types? They seem a lot better at wealth centralization and political intrigue than your average middle class American."

From personal experience, the whitish Latin American upper class are utterly unimpressive people who would be very unlikely to have great success in a real white country. Hence their total lack of contribution to math, science, technology or anything else.

If you took a large group of white American trailer park denizens or Bulgarian prison inmates and put them in a country like Ecuador or Honduras, their decedents would probably form an upper class in a generation.

Were talking about societies where the top leaders have a lower general competence level than American rental car outlet managers. These countries are a joke for a reason. Look at what Dutch/English whites did with much more primitive natives in South Africa for comparison.

That little anecdote about the jaguar guy only describes psychopathic violence that a native of New Guinea or resident of East St. Louis could do just as well. That kind of behavior has a negative correlation with the capacity to create advanced civilization.

Carlos Salinas is the prototype for these off brand clowns. Any Caucasoid person who finds himself in that part of the world will feel like he is playing basketball against midgets(ie bronze age people). "White" Latin American elites feel threatened by Arabs who often out compete them in business and politics. That says it all.

pat said...

I never killed a Jaguar with a knife but I did spend a summer restoring an XK-E. Does that count?

Sorry about my Poland tank date. My bad. I promised recently to fact check my posts and sure enough I didn't. The reference came from "Armored Thunderbolt" by Steven Zaloga.

Albertosaurus

Anonymous said...

The Jaguar killer represents the nature of the "Castilian" Latin American elites. They are as tough as nails.

No it doesn't. Most Latin American elites are absentee landlord and metropolitan types. They're slave drivers not rugged outdoorsman or yeoman types.

You're wrong about this just like you're wrong about thinking that Romer was backing mestizos against the elites.

DaveinHackensack said...

"That may be, but Google did not come out of Manhattan. Nor has much else of note."

Google didn't, but lots of other tech companies are coming out of New York now. Here's a list of 409 of them: Made in New York. The booming NYC tech ecosystem is part of the reason why Google, Microsoft, Twitter, and other West Coast tech companies have opened big New York facilities in recent years.

Silver said...

Cail,

How much money does the West dump into those countries every year to atone for white liberal guilt again?

About $50 bucks per African. They also receive substantial technical assistance, but the fact is, regardless of whom they learned to be productive from, they're doing most of it themselves.

Silver said...


"Revenue from canal tolls represents today a significant portion of Panama's GDP."
If every nation had a canal, that would not be the case, they enjoy a fairly hefty monopoly though, and can benefit from it.


Panama's three times as rich, man. You can't tell me the canal explains all that. I doubt it accounts for even a quarter of Panama's GDP.

Silver said...

Translation: 3 of 4 sub-Saharan countries have per capita GDP equal to about 1/3 the per capita GDP of medieval Europe.

No, they're about on par with medieval Europe, about one in four or five significantly wealthier.



Silver said...

I suspect this is largely a factor of increased natural resource wealth extraction, lately driven by China. A few natives at the top get rich off it, and it drives up "per capita" numbers, but I suspect the vast majority get no benefit whatsoever.

No, the income distributions aren't always particularly extreme. While some countries have Gini's around 55-60 (L. American levels) a far greater proportion of Africa than L. America is in the 40s and high 30s.

Anyway, all this was occurring way before China arrived on the scene. Some of you act like China has been a world economic power for the past sixty years rather than the last ten or so.

Also, as the global economy continues to skid, Chinese manufacturing will decline, less resources will be needed, and African GDPs will slide again.

You've got to look at the long-term trends. China is nowhere near exhausting herself yet. The inevitable short-term perturbations just don't make any long-term difference. (Do you recall the US recession of 1958? How could you not, man? It's a miracle the US economy survived, a sheer miracle.)

Anonymous said...

Slain Honduran lawyer complained of death threats

http://www.huffingtonpost.com/huff-wires/20120924/honduras-lawyer-killed/

"A prominent Honduran human rights lawyer gunned down after a weekend wedding had long complained about death threats, including in documents filed last year seeking protection from a powerful billionaire landowner.

Antonio Trejo Cabrera, 41, who died early Sunday after being ambushed by gunmen, was a lawyer for three peasant cooperatives in the Bajo Aguan, a fertile farming area plagued by violent conflicts between agrarian organizations and land owners. The most prominent is Dinant Corporation owned by Miguel Facusse, one of Honduras' richest men. Thousands of once-landless workers hold about 12,000 acres (5,000 hectares) of plantations they seized from Dinant.

Trejo, who was shot six times after attending a wedding, reported threats in June 2011, according to documents obtained by The Associated Press, including photocopies of a BlackBerry message he received saying: "Trejo, you dog, you have 48 hours to get out or you're dead.""

"Honduras, considered to be one of the world's most dangerous countries, is plagued by assassinations of journalists, lawyers and public officials, very few of which are ever prosecuted. No arrests have been made in Trejo's killing."

On Monday, authorities confirmed that human rights prosecutor Eduardo Diaz Madariaga was killed in Choluteca, 84 miles (135 kilometers) south of the capital.

More than 60 people, most of them farmers, some of them Facusse employees, have been killed over the past three years in the conflict over the Bajo Aguan Valley, according to activists, police and Facusse's company.

Trejo had recently helped farmers gain legal rights to several plantations.

Trejo had also helped prepare motions declaring unconstitutional a proposal by the Honduran government and a U.S. company, MGK Group, to build three privately run cities with their own police, laws and tax systems.

Just hours before his murder, Trejo had participated in a televised debate in which he accused congressional leaders of using the private city projects to raise campaign funds.

MGK director Michael Strong said the company is "horrified" by Trejo's killing.

"We believe that Antonio Trejo, had he lived long enough to get to know us, would have concluded that our approach is 100 percent beneficial to Honduras and Hondurans. We are saddened for his family and understand what a tragedy this is for trust and goodwill in Honduras," Strong said in a statement to The Associated Press."

Anonymous said...

This kind of thing will get worse and will spread as rent-seeking via land and resource centralization become more important:

http://www.salon.com/2012/09/26/robots_are_coming_for_your_job/

"Among the robot-era rich, the big winners might be landlords and resource owners, whose income does not depend on doing things that computer programs might do better, but merely on ownership of particular parcels of property. Mineral rights owners might be tomorrow’s answer to today’s hedge fund tycoons. Of all forms of wealth, passive income from the ownership of property is the least justified in terms of personal merit or effort. Look for anti-landlord campaigns like that of Henry George in the 19th century to make a comeback in the 21st."