35 Comments

Should be required reading for the US State Department. It would help them understand the stunning success rate of their regime change and nation building efforts the last 40 years. Excellent work.

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Thank you.

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it depends what the real goal is as to whether or not there was success. Rarely is the real goal nation building. If you instead measured certain Swiss bank account balances, you might see more success.

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My favourite insight: "Reversing (i.e. perverting) status patterns so that people get prestige from victimhood—extending to various forms of failures of competence or even wildly anti-social behaviour—while stigmatising people who conspicuously successful (as oppressors or exploiters) is deeply destructive of human flourishing." Re human capital, I note that there is a debate currently as to whether typical IQ in sub-Saharan Africa is 70 or 80.

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Ta. IQ is clearly both a variable that matters and complex matter. Such things as childhood diet, parasite load and stimulation can all affect IQ which also clearly has a strong heritable element. There does not appear to be much you can do about adult IQ.

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People might be interested to know, that this a view held quite widely amongst senior bureaucrats, (who've seen the foreign aid failures up close). The problem is that all of the alternatives are unpalatable for the politicians.

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While I am often quite scathing about bureaucracy, there are a lot of smart, perceptive and well-informed, senior bureaucrats.

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Do you mean the ones that are smart and perceptive enough to know better than to become politicians? :-)

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"Of course, that there is usually no systematic, reliable, interaction between the costs and benefits of a regulation, and the act of regulating, is an even larger problem."

I’ve been having heretical thoughts about regulation lately. While some regulations have undoubtedly ensured good or prevented bad, it’s entirely possible that regulation overall has left us worse off.

Progress, including advancements in safety, relies on innovation. Regulations, by stifling innovation, may make us less safe—and there’s good reason to believe that they do.

First, regulations cost the U.S. economy nearly $2 trillion annually. Wealth enables trial-and-error experimentation by reducing its cost and risk. Losing trillions in potential wealth each year means less innovation and, consequently, less safety.

Second, regulations often mandate specific technologies or procedures. Given the rapid pace of technological change, these requirements quickly become outdated. Worse, suppliers of the mandated goods and services have an incentive to lobby for their continuation long after they’ve become obsolete.

Finally, the difficulty and expense of changing existing regulations discourage inventors and entrepreneurs from developing better alternatives.

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All good points. The Jones Act alone is estimated to greatly reduce river, canal and coastal traffic in the US.

https://en.wikipedia.org/wiki/Merchant_Marine_Act_of_1920

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I forget where but I recently read of a proposal that all regulations should sunset after some number of years (say 3, 5 or 8) so that their potential renewal would have to re-evaluate their efficacy and efficiency. This would help assess if new technology has overcome the original situation. It would also force the lobbyists to spend more time and money and effort (again!) to try and influence the net result. Plus, when you are busy re-evaluting your past regulatory output, you don't have time to create new imaginary benefits from more rules.

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Man, oh man, I liked this post.

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Excellent.

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Very sensible: culture and connections are integral to humanity. We are not just widgets.

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And Richard Posner’s name never came up …

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I restrained myself.

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Another fine piece of work, forcefully blowing away befuddling clouds of social bloviation as usual.

The "societal destructiveness of reversal of status patterns" concept is one of those things that's intuitively obvious...after someone points it out to you so succinctly.

Thank you for your continuing brilliant work in so many fields.

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And there is much to like in a comment with the phrase " ... forcefully blowing away befuddling clouds of social bloviation ..." in it.

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My pleasure and thank you for the words of support.

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Well written and interesting! In my opinion, the analysis as it is in this essay is incomplete

because while it does allude to issues of centralization and diffusion by pointing out the the importance of human and social capital within localized cultural and institutional contexts, it stops short of directly looking at how the structural dynamics of centralized versus decentralized systems shape access to political and economic decision making. Economic growth is deeply influenced by how power and resources and decision making are distributed geographically and socially. Models that assume uniform conditions dont account for how centralized systems concentrate economic benefits and decision making, inhibiting innovation and excluding large swaths of society.

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I was trying to keep the post short and sweet.

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Throw money at it isn't just about economic growth, it is a very common approach - progressives with anything social, conservatives with national security (and law and order). Truly voodoo economics.

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Excellent essay.

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Ta.

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Great analysis - thank you!

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My pleasure.

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Add on, maybe OT.

Through most of human history, it was producers who were most lionized---he who hunted the best, farmed the best, cobbled the most and best shoes; she who produced successful children.

The producers embodied the valuable human capital.

(Feudal lords and others were parasites who gained high status through force of arms and displays of wealth).

The consumers were tolerated, and less so the less productive they were.

Today, macroeconomists lionize consumers.

Sure, there are some good reasons for that, and international protectionism can go too far.

Still, I get an uncomfortable feeling when a nation's producers are crushed under trade deals, but we hear the "but the consumer benefits" chants.

Really?

How much human capital is required to be a consumer, vs. how much it takes to be a producer?

Is it wrong for a nation to support its producers?

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But if Says Law applies, then a consumer had to have been a producer first, thus he had to have some level of human capital?

And for those of us who are not "natural shoppers" in todays complex world, it can take a lot of effort to suss out the "best deal" among the many attempts to attract our buying attention. So much effort that I often forgo it rather than bother, so there is less and less that attracts my purchasing power [besides books and Substack subscriptions, of course :-) ] [And I end up spending way too much time on the Amazon web sites evaluating whether to buy a given book or not.]

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Well, a nation can also sell off assets, and become further indebted, to pay for consumption of foreign goods and services. Which the US has done, in spades.

"Who Owns US Stock? Foreigners and Rich Americans.

Tax Policy Center

https://taxpolicycenter.org › taxvox › who-owns-us-stoc...

Oct 20, 2563 BE — Our new analysis shows that foreign investors owned about 40 percent of US corporate equity in 2019, up substantially over the last few decades."

---30---

Real estate is heavily owned by offshore interest too, and a large chunk of Treasuries.

The same macroeconomics who chant "There is not such thing as a free lunch" then seem to insist there is a free lunch when it come to chronic US trade deficits.....

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That is getting into resilience questions, which mainstream economics does not do so well with.

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But, but, if we make people Homo Economus, we can do math! Like real scientists!

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*chuckle* Strangely, I am not a fan of Samuelsonian Physics envy.

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Mathematics is the language of the modern priesthood. Torquemada never tortured a heretic like most social scientists torture the statistics.

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I’ve had an revelation; all the fraud by the real economists (FIN and Central Banks) 🏦 is in fact a rejection of materialism: you see below your various pensions, Bunds, 401s and Treasuries etc are (-) negative $712 Trillion dollars of Notional Derivatives (Fraud). Notional means imaginary in Finance just as it does in the dictionary.

A strange way to reject materialism by utter negation of all means, so the end can only be… a rejection of materialism by the Real materialists of Finance.

Well. Annus Mirable Dictu indeed!

2025 gonna be lit! 🔥

https://data.bis.org/topics/OTC_DER/tables-and-dashboards/BIS,DER_D5_1,1.0

At last the dots connect .

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When I was young, I wanted to talk the way this article is written. It's like you're looking at the top of a mountain, with YEARNING to ACHIEVE the summit. I'm still looking at the summit, but now without yearning. Too much drone footage of the top, I've seen.

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