Waiting Room Reading...

Except for extreme weather, Best (pick any topic) of 2012 and the zombie gun control debate there's little left for the next few days but recreational reading. Hence the title "Waiting Room Reading..."  Most folks know by now that the Fiscal Cliff is the new Y2K and holiday sales were less than expected. Until another Congress is installed the lame duck outfit will do little more, as usual, than kick the can down the road. So here are a few items to ponder as we wait.

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►Modern Asia resembles the Middle Ages, with tiny elites running big chunks of society and local economies aggregating into state empires. India, advertised as "the world's largest democracy," remains a cobbled together assembly of ethnic and sectarian entities with little more than ritual ties to central authority. And China is a majestic modern version of Medieval royalty that makes Europeans appear primitive. Chinese politics are operationally a Twenty-first Century monarchy.  The leadership are not called "princelings" for nothing. 

Check out this interactive Bloomberg graphic. 

Bloomberg News mapped the families of Communist China’s “Eight Immortals” to reveal the origins of princelings, an elite class that has been able to amass wealth and influence, and exploit opportunities unavailable to most Chinese. Bloomberg tracked 103 people – descendants including children, grandchildren and great grandchildren, and their respective spouses. The Immortals, now all dead, are revered in communist lore as revolutionary fighters who led China’s economic opening after Mao Zedong’s death. The identities and business dealings of these families are often cloaked in secrecy because of state censorship and complex corporate webs. To document them, Bloomberg scoured thousands of pages of corporate filings, property records, official websites and archives, and conducted dozens of interviews from China to the United States, where many were educated and have at times made their homes. To read the related stories click here and here.

►We have heard the term economic growth so often it has lost meaning. It has no more significance than saying "God bless you" when someone sneezes. When those DOW and NASDAQ numbers punctuating the end of news broadcasts are recited listeners hear them, and unless the numbers are way out of control most people pay little attention. Those with retirement plans invested in stocks and bonds respond subliminally, but unless a story about one of their little treasures is specifically mentioned most investors don't care, presuming that as long as "economic growth" is positive the sun will still come up tomorrow and today's storm damage is covered by insurance.    
Roubini points to a contrarian view of economics no one wants to think about. 

Global growth is slowing – especially in advanced-technology economies. This column argues that regardless of cyclical trends, long-term economic growth may grind to a halt. Two and a half centuries of rising per-capita incomes could well turn out to be a unique episode in human history.
It is time to raise basic questions about the process of economic growth, especially the assumption – nearly universal since Solow’s seminal contributions of the 1950s (Solow 1956) – that economic growth is a continuous process that will persist forever.

• There was virtually no growth before 1750;

• There is no guarantee that growth will continue indefinitely.

This column introduces my CEPR Policy Insight, which argues in detail that the rapid progress made over the past 250 years could well turn out to be a unique episode in human history (Gordon 2012).

He's making the case that the economic progress we take for granted is a historic anomaly That CEPR Policy Insight link doesn't work for us mortals but the rest of the summary reveals more than we want to think about.

I have always felt that what we call "economics" is really a variant of the chain-letter effect writ large. Money is nothing more than a bunch of IOUs being passed along like chips or markers at a gaming table. There is no real value until it is redeemed for goods or services. And even then it vanishes. Goods may endure for decades, even generations, but over time even land loses whatever original utility it may have had in the past. Whether your third great-grandfather traded a few acres for two mules and a wagon is of no importance if Walmart persuades the city fathers the land will generate more in "economic activity" than your old home place, get ready to accept whatever "fair market value" the land will have. Eminent domain will take it by negotiation or condemnation. 

If you think this is crazy talk, do a bit of arithmetic -- back of an envelope will do -- and add together the world's "sovereign debts." Then figure out how many  years  centuries of "economic activity" will be needed to liquidate the total. See where this is going?

(And I didn't even mention inflation. Remember inflation? I thought not.)

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Lest I forget, here is what I left in a comment at the Chuck Hagel post yesterday.
I so want to climb on a soapbox and preach a fire and brimstone sermon whupping up on Conservatives for being so pig-headed. Unfortunately I'm a three-time old-guy blog-looser reduced to Facebook, Twitter and assorted comments threads. 
*sigh*
So here are three more links this morning that get my Liberal blood flowing. I never expected to get excited over anything in the American Conservative, but stranger things have happened. 

►http://www.theamericanconservative.com/articles/revenge-of-the-reality-based-community/

►http://krugman.blogs.nytimes.com/2012/11/27/bruce-bartlett-is-a-mensch/

►http://www.nytimes.com/2010/04/28/books/28conserv.html?_r=0

►http://economix.blogs.nytimes.com/2012/12/25/a-conservative-case-for-the-welfare-state/?ref=economy

This last link will warm the heart of any good Liberal. Bruce Bartlett (remember Reagan's chief economist, dean of American Conservative economists?) writes this...

Thus Republicans are now using the fiscal impasse to try to raise the age for Medicare and reduce Social Security benefits by changing the index used to adjust them for inflation. They know that such programs will be easier to abolish in the future if the number of people who qualify can be reduced and benefits are cut so that privatization becomes more attractive.
This is foolish and reactionary. Moreover, there are sound reasons why a conservative would support a welfare state. Historically, it has been conservatives like the 19th century chancellor of Germany, Otto von Bismarck, who established the welfare state in Europe. They did so because masses of poor people create social instability and become breeding grounds for radical movements.

These prescient words of Bruce Bartlett, now nearly three years old, deserve repeating.

Ever since Richard M. Weaver wrote his bracing conservative manifesto in 1948, “Ideas Have Consequences,” the title phrase has been a guiding maxim for the movement. But conservatives like Mr. Frum worry that the type of ideas Weaver was referring to are in short supply these days.
At the moment, the people leading the way on the right are disparate grass-roots Tea Party activists who are operating without a leader or shared ideology.
“Conservative intellectuals are in eclipse at the moment,” Steven F. Hayward, a senior fellow at the American Enterprise Institute, said during a telephone interview.
Mr. Bartlett, who lost his job at the National Center for Policy Analysis, a conservative research institute, after accusing George W. Bush of betraying the Reagan legacy, said in an interview: “Every intellectual movement needs to constantly question itself; otherwise it becomes stale. But conservatives have sort of reached a position of intellectual closure. They don’t think there are any new ideas of particular interest to them. Their philosophy is fully formed. The only question is how best to implement conservative ideas in the political debate.”