Utopia, you are standing in it!

The projected future path of labor productivity in the U.S. is perhaps the most important input to the projected future path of GDP in the U.S. There are lots of estimates floating around, many of them pessimistic in the sense that they project labor productivity growth to be relatively slow (say 1.5-1.8% per year) over the next few decades compared to the relatively fast rates (roughly 3% per year) seen from 1995-2005. Robert Gordon has laid out the case for low labor productivity growth in the future. John Fernald has documented that this slowdown probably pre-dates the Great Recession, and reflects a loss of steam in the IT revolution starting in about 2007. This has made Brad DeLong sad, which seems like the appropriate response to slowing productivity growth.

An apparent alternative to that pessimism was published recently by Byrne, Oliner, and Sichel. Their paper is titled “Is the…

Just wanna share an article that wrote by MILTON FRIEDMAN back in the days.

Hong Kong Wrong – What would Cowperthwaite say? 

BY MILTON FRIEDMAN
Friday, October 6, 2006 12:01 a.m. EDT

It had to happen. Hong Kong’s policy of “positive noninterventionism” was too good to last. It went against all the instincts of government officials, paid to spend other people’s money and meddle in other people’s affairs. That’s why it was sadly unsurprising to see Hong Kong’s current leader, Donald Tsang, last month declare the death of the policy on which the territory’s prosperity was built.

The really amazing phenomenon is that, for half a century, his predecessors resisted the temptation to tax and meddle. Though a colony of socialist Britain, Hong Kong followed a laissez-faire capitalist policy, thanks largely to a British civil servant, John Cowperthwaite. Assigned to handle Hong Kong’s financial affairs in 1945, he rose through the ranks…

I just found an interesting NBER working paper (gated) looking at the frustrations of trying to reform the Indian bureaucracy.  The paper is titled “Deal with the Devil: The Successes and Limitations of Bureaucratic Reform in India” and is written by Iqbal Dhaliwal and Rema Hanna.

It reinforces the argument that technology is no panacea in these types of reform. There seems to be no easy answers or shortcuts to bringing about real reform. Here is a shortened version of their abstract:

Employing a technological solution to monitor the attendance of public-sector health care workers in India resulted in a 15 percent increase in the attendance of the medical staff. Despite initiating the reform on their own, there was a low demand among all levels of government–state officials, local level bureaucrats, and locally-elected bodies—to use the better quality attendance data to enforce the government’s human resource policies due to a fear of generating…

Excellent article by Lawrence Wright:

Al Qaeda was originally envisioned as a kind of Sunni foreign legion, which would defend Muslim lands from Western occupation….

Bin Laden had asked Zarqawi [founder of ISIS] to merge his forces with Al Qaeda, in 2000, but Zarqawi had a different goal in mind. He hoped to provoke an Islamic civil war, and, for his purposes, there was no better venue than the fractured state of Iraq, which sits astride the Sunni-Shiite fault line….Violent attacks would create a network of “regions of savagery,” which would multiply as the forces of the state wither away, and cause people to submit to the will of the invading Islamist force….[A] broad civil war within Islam would lead to a fundamentalist Sunni caliphate.

In other words, Al Qaeda is focussed on expelling the West from the Middle East but ISIS is focussed on creating a Sunni Islamic superstate. Hence…