🚀 go-pugleaf

In article <462ri4$fd0@rand.org>, Chris Swenson  <swenson@rand.org> wrote:
>mwitte@casbah.acns.nwu.edu (Mark Witte) wrote:
>
>>...In attempting to explain growth and
>>levels of income in various nations, Fukuyama ignores the basic economic tools
>>of examining growth of the capital stock and labor force.  How you can say he
>>does anything but ignore the most basic issues in neo-classical economics it
>>beyond me.  
>
>Again, Fukuyama was not trying to examine the growth of the labor force, or 
>anything of the sort.  

	My reading of the book was that Fukuyama is trying to explain the
levels and growth rates of economic output across nations.  He does give lip
service to neoclassical determinants of these but then he very oddly ignores
their explanitory power.  Attempting to explain economic growth without
considering growth of the labor force or capital stock is a remarkable
rejection in practice of what he himself admits are the most important
determinants of growth.  

	Had you carefully read my original post on this issue, you'd have seen
that I fully favor the appropriate use of institutional factors in explaining
economic phenomena.  His hypothesis was that factors like "trust" matter in 
explaining a nation's economic health in addition to standard economic
variables.  A reasonable starting point would be to estimate how much the
economic factors explain on their own.  Then attempt to test whether the
institutional factors fill in the missing pieces and add to our understanding
of growth in those nations.  

	If Fukuyama was as successful at conveying to the reader the
importance of economic factors, as well as institutional ones, in explaining
growth, then you having read and understood the book should not wonder why I
found the omission of quantitative measures of labor and capital variables
puzzeling.  If only to support his argument that they fail to fully explain
growth in Asia.  

>If you would read his *book* instead of one bad *book review*, you might 
>understand this.  

Having had a chance with both the book and the review, I am in some way worse
off than someone who seems utterly unfamiliar with the work of Robert Solow?

>And how *you* could continue to deny that 
>the most basic facts about a society (such as its religion or its culture) might 
>have even a small effect upon a nation's economic performance is beyond me. 
>
Whew! I am glad you ephamsized "you" there. My office mate thought you were
talking to him. 
Since it is me you're talking to, let me repeat that I have never suggested
rejecting institutional explanations for growth out-of-hand. Call me 
unimaginitive, but I think we should begin with well understood economic
factors, before we look elsewhere. 

>>>"As Adam Smith well understood, economic life is 
>>>deeply embedded in social life, and it cannot be understood apart from 
>>>the customs, morals, and habits of the society in which it occurs.  In 
>>>short, it cannot be divorced from culture." (*Trust*, Free Press, 1995, 
>>>p. 13).
>>
>>Ah, now there's some penetrating analysis.  It's certainly better than trying
>>to estimate some sort of model of economic growth and trying to determine what
>>part of the residual (beyond the factors accounted for by growth in capital,
>>labor, and other well established factors related to changes in production) is
>>accounted for by the factors Fukuyama thinks are important.  
>
>I agree.  It is *very* pentrating.  For how do you quantify "Trust"?  How do you 
>quantify "religious belief"?  How do quantify "spontaneous sociability"?  What 
>metric do you use to measure such concepts?   You can't, and to try to do so is 
>to fail to understand what Fukuyama is trying to say.

You should probably read or re-read the sections where he does attempt to
classify, in an ordinal sense, countries according to these variables.  It 
would seem to me that he feels he can quantify these factors.  Whether this
means that he also fails to understand what he's trying to say, I can't say.

>
>>>>Fukuyama's complete reliance upon institutional and
>>>>cultural factors and his ignoring of neoclassical causes turns what
>>>>might have been an interesting piece of work into a complete waste of
                       ^^^^^^^^^^^^^^^^^ Note my support of 
                                         institutional analysis.
>>>>good paper.
>
>>>Before you go off insulting other people's work, you might want to read 
>>>what they actually said on the matter.
>>
>>And before I write a book on issues relating to economic growth, I might 
>>want to study the standard methodology in the area.
>>
>
>Fukuyama *did* study the standard methodology, and he has the footnotes to prove 
>it.  Again, true to form, you have not shown otherwise.  

That's one for you!  You can dismiss any argument as long as you put it in
the footnotes.

>(I pity any dissertation committee that has to read the poorly researched 
polemic that you will, no doubt, write)  

Poorly researched? You mean like: "I want to explain A. Clearly the most
important factor is B, but maybe C is important too. I will focus on C
and leave B out of the analysis."

I will be sure to double check the results in the RAND papers I reference.

As for pity, I hope your interest in Fukuyama is purely personal. I would
feel awful if someone paid you for this quality of analysis.

>Far from discounting neoclassical economics, Fukuyama is 
>a true believer.  However, Fukuyama argues, quite convincingly, that there are a 
>few things which neoclassical economics cannot explain.
>
Quite convincing? How much of the economic growth does Fukuyama attribute
to economic factors? How does he arrive at this figure? Which of labor growth,
advances in productivity or capital accumulation has been the major factor?

I am quite happy to conceded that there are a "few" things that neoclassical
economics doesn't explain (like what is Claudia Schiffer doing with David
Copperfield...oh...right...men and women are *passionate* ). But, a 
convincing explanation of economic growth, should attempt to quantify the
extent to which labor and capital matter.

>For example, the "standard methodology" you make reference to does not explain 
>why An Wang gave his incompetent son control of Wang Laboratories.  How could 
>this be so?  

Are you suggesting that neoclassical economics fails to explain the behaviour
of every individual, all of the time? Damn! I was hoping no one would notice.

>Because, as Fukuyama conclusively shows in his book, it overlooks 
>the retarding impact Confucianism has on industry.

I must have missed the part where he showed that only in Confucian societies
does nepotism exist.  (And does Confucianism explain the level of economic
development of Taiwan?)  

>
>Again, if you *are* going to write your own book, it might be wise to actually 
>read what other's have written before you begin insulting them.
>
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>  | Chris Swenson                                        |
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