Stiglitz on China and Rogoff on Wolfowitz

There are two recent and interesting Project Syndicate articles by Joe Stiglitz and Ken Rogoff.

Joe:

China’s New Economic Model

China’s success since it began its transition to a market economy has been based on adaptable strategies and policies: as each set of problems are solved, new problems arise, for which new policies and strategies must be devised. This process includes social innovation. China recognized that it could not simply transfer economic institutions that had worked in other countries; at the least, what succeeded elsewhere had to be adapted to the unique problems confronting China.

…

As China moves away from export-led growth, it will have to look for new sources of dynamism in its growing entrepreneurial ranks, which requires a commitment to creating an independent innovation system. China has long invested heavily in higher education and technology; now it is striving to create world-class institutions.

…

Too many people think of economics as a zero-sum game, and that China’s success is coming at the expense of the rest of the world. Yes, China’s rapid growth poses challenges to the West. Competition will force some to work harder, to become more efficient, or to accept lower profits.

But economics is really a positive-sum game…

We should all hope that China’s new economic model succeeds. If it does, all of us will have much to gain.

Ken:

The World Bank at bay

Even if Paul Wolfowitz is eventually forced to resign, nothing will be gained if George Bush is allowed summarily to choose his replacement.

…Why does the world meekly go along with the status quo and let the US dictate the Bank's top position? It is a sorry tale of poor global governance. Europe does not get in America's way because it wants to maintain Europe's equally out-dated privilege of appointing the head of the International Monetary Fund, the Bank's sister institution.

Asia has little choice but to defer to the US and Europe's shenanigans because it is grossly under-represented in both organisations. As for Africa, its leaders are loath to do or say anything that might interrupt the flow of World Bank largesse.

Many people, including myself, have long complained about the leadership selection process at the World Bank and the IMF. How can the Bank and the IMF continue to go around lecturing developing economies on good governance and transparency but fail to allow change in their own houses?

And just for fun, Ken said this to Joe back in 2002:

“Joe, as an academic, you are a towering genius. Like your fellow Nobel Prize winner, John Nash, you have a "beautiful mind." As a policymaker, however, you were just a bit less impressive.

Other than that, I thought it was a pretty good book.

Sincerely yours,

Ken”

It is from his open letter to Jeo expressing his discontent for Globalization and Its Discontents.

Teehee,

Elanor