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Japan, despite its very high standard of living, had, until the current economic downturn, a strongly positive balance of trade. An unusually high propensity to save, coupled with an inefficient system for distributing consumer goods and services, keeps domestic demand down.

Inefficient by what measure? Japanese consumers prefer fresher, higher quality goods and their system of distribution merely accommodates those preferences. Isn't that allocatively efficient?


An interesting paper from Jean-Marie Grether and Nicole Mathys in Switzerland entitled "Is the World’s Economic Center of Gravity Already in Asia?" and dated August 2008 locates the world's current economic centre of gravity off the north coasts of Norway and Russia. See: http://www.hec.unil.ch/nmathys/08.03.pdf

The bad news for us in New Zealand is that Auckland is the most distant major city (with more than one million inhabitants) in the world from the economic centre. The vaguely promising news for New Zealand is that the economic centre is slowly moving closer.

As for Iceland, even without its recent economic collapse, the centre has been moving away to its north east since the mid 1970s.




Anon: Inefficiency in Japanese distribution included laws preventing super markets being introduced unless local, small merchants agreed.

Also........ there was a "no foreigners need apply" which, say in the case of, say, Alaskan fish, meant fishermen having no option of going around the "black ship" middlemen/kiretsu. Fishermen got less and their consumers took a beating as well.


It's a very minor point, but regarding ...Australia and New Zealand, which are not culturally or ethnically Asian...

What, pray tell, is an ethnic Asian? Even within ethnic groups there is often a lot of diversity that governments prefer to gloss over. More strikingly, in a country like Malaysia, Malays, Chinese, and South Asians are all considered different ethnic group.


Your otherwise excellent analysis ingnores the Indian economy of 1.2B people with a large working force. India is not, as you describe it, 'mercantilist' but a net debtor.


@Anonymous 10:54 p.m. May 31, 2009 (I guess we're all anonymous now!)

Those policies don't look allocatively efficient! Thanks for the context.


The Pacific Rim, no doubt, will direct attention for economic and security reasons, as
World’s population continues to grow influencing the leverage of such numbers.

It is the best interest of every American to learn as much as possible about this region
of the world.

North Korea shows to the world that a sustain harmony needs to be reached for all parties.

China, is the 21st century super power graining creditability of action. Maybe it will do a
better job on the world stage than the United States.



Hmm: "ethnically Asian" may be not much more than the differences in the economic social structure.

Theirs gives strong incentives to save due to a lack of SS. And, in the past, a lack of banking or an "FHA" etc. meant saving to pay cash or large down payment a home....... or conveyance.

I'd say the "Western" style of loaning money efficiently (except since 2000?) so that a young family can buy a car and a comfortable home with little savings is preferable, and very likely being adopted in China now that there is a cash economy.

Once here, even recent Asian immigrants catch on quickly to building as much home as they can afford on a 30 year loan. It seems like a sound idea to me to build a home lasting 50-100 years or more with 30 year financing.


In reply to the previous post on Asian ethnicity, one big advantage they have is that their workforce is more homogeneous and their leadership is not afflicted by racial guilt. While a more heterogeneous work force in terms of ability contributes to higher productivity, ethnic heterogeneity contributes to lower cooperation, retention, and overall productivity. Every indication is that workers prefer and do better in segregated work places. See a May 2004 study,
*Diversity and Productivity in Production Teams,* by

Barton H. Hamilton
Washington University, St. Louis - John M. Olin School of Business

Jackson A. Nickerson
Washington University, St. Louis - John M. Olin School of Business

Hideo Owan
Aoyama Gakuin University - Graduate School of International Management



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Anon 7:06: Whew! That's a pretty bold theory! and one that I doubt, but which could be a topic for a LOT of discussion.

Today, it seems that the US Army and other military services have come the furthest in terms of being color blind, ethnically diverse and working as a single Green team, and that all in all the US in all its diversity has done pretty well.


Let me try posing my reply to Anon 1:118 again. Well, I do not agree with your rosy assessments of the American military or recent American culture more generally, Anon. 1:18. I do appreciate your comments though. As for the American military, they sort their recruits with I.Q. tests so that they gain a greater degree of homogeneity among ethnic groups than exists in the general population. Second, once in the military there is an "official culture" and "an unofficial" culture. The official culture of the military is the PC version that you refer to above. The unofficial culture involves racial conflict and fragmentation. Soldiers and sailors tend to gather in subgroups according to race and ethnicity forming in-groups and out-groups. For example, see the chapter on racial problems in the Navy in *Problems and Issues of diversity in the United States* by Larry L. Naylor. The variation between the official and unofficial picture of race relations in the military is created by the authoritarian nature of the military that can sweep discussions and overt expressions of conflict under the rug.

As for the problems created by diversity in the U.S. more broadly, I would recommend Nabor's book as well as recent studies by Robert Putnam and Duke University pointing to the breakdown in public life due to increasing diversity. A study by the British government produced similar findings. People simply withdraw from common areas of social intercourse due to the frictions and misunderstandings created by people who speak differently, look different, and act with from different social assumptions. Many people who are quite liberal tend to segregate themselves following the general trend noticed by Putnam. Consider the article that I provide a link to below describing how racially homogeneous Berkeley, California is.

Even when people are similar in ethnicity, subtle differences in tempo and pace of language can lead to intense anger due to constant irritations and misunderstandings. Sociolinguist Deborah Tannen is a good source for a close analysis on this point. As Stephen Pinker has pointed out, this is why we are not born with a fully developed language already in place--so that we can adapt to the particular people and setting we are born into.

Here are titles of articles on the internet that I refer to above. I tried posting my comments with links yesterday, but they still have not posted. I have taken out all internet addresses. Perhaps, this cite is now blocking all posts with links due to fear of spam without their test of typing 'human' in place. If you or anyone else is interested, you should be able to find these articles through a Google search. The first article reports on Putnam's study. The second one is the article telling of Berkeley's lack of racial diversity. The third is a discussion of the benefits and costs of diversity from the Brookings Institute--the author notes that many studies on diversity in the U.S. neglect to discuss or unrealistically downplay the costs to diversity:

"The Downside of Diversity."
A Harvard political scientist finds that diversity hurts civic life. What happens when a liberal scholar unearths an inconvenient truth? Boston Globe, By Michael Jonas | August 5, 2007

SF Gate San Francisco Chronicle, Claremont-Elmwood
"Homogeneity in Berkeley? Well, yeah"
Rona Marech, Chronicle Staff Writer
Friday, May 24, 2002

"Beyond Sushiology: Does Diversity Work?
Affirmative Action, Race, Ethnicity"
Peter Skerry, Nonresident Senior Fellow, Governance Studies
The Brookings Institution


Anon: 2:11 Well, I'm trying to take this stuff seriously though it's not a natural for me.

This part did catch my eye though......

"As for the American military, they sort their recruits with I.Q. tests so that they gain a greater degree of homogeneity among ethnic groups than exists in the general population."

.......... assuming a group is sorted on IQ alone it's certainly true that you'll get those of similar IQ's or test passing abilities. But that is not likely to give you a group more ethnically (or racially?) homogeneous than the original group.

Perhaps of interest, though it was a long time ago, I worked in Ft Ord's classification and assignment office. At that time they did have a "GT" score that is still accepted by Mensa as an IQ test while the tests of the last 25 or so years are not. Anyway, the selection process was not so clear cut. First off, some of those volunteering requested certain MOS (specialties) and often got them......... regardless.

Then, it being Army, there was the task of filling the infantry, so to a great extent we'd cull files for those with top physical profiles. Good eyesight, no flat feet or other skeletal problems, and there was a sort of aptitude test that asked stuff like "Would you rather go camping or read a book?"

Next might be looking for high clerical scores for company clerks etc.

Then we'd go after those with high mechanical aptitudes (one subset of IQ?) for motor pool and fixing tanks.

Those who could distinguish dots from dashes in those dark ages of Morse Code headed for radio school even those Morse was well on its way out.

Then? we used to joke that cooks were those not selected for the skills above with flat feet. Of course it's not quite true but like most humor it had a grain of truth to it.

But wait! it was even worse than that while much of the Army at the time was drafted from a broad group of Americans, volunteers tended to come from the rural south where military service was seen as a better job or start than what was available at home.

As you can see it would be difficult to use this group for controlled studies to prove any "diversity doesn't work theories".

"Back then" I'd grant that in off hours there was a tendency of "likes" to clan together but that included NYers hanging together etc.... but at work there was certainly more variation between individuals than between "races" or "ethnicities".

Anyway, not much to be gained as none of us want to go back to segregation on any basis, but freedom of association is one of our fundamental tenets so "likes" may well want to favor "likes"........ one of the reasons Sandra Day Oconner found that we'd need affirmative action to overcome these biases for another generation?


Mercantilism is superb macro-economic policy for expanding and developing one's Domestic Economy. It has been used to great effect by: Britian, Germany, France, U.S., Japan and now China. Since the former countries have essentially abandoned their policies, only one has continued to expand. Guess who?

As a response, to keep their economies from being absorbed by the "Chinese Miracle", is a full blown Trade War now in th offing?


Having turned on its stimulus tap to offset declining demand for its exports, this due to global recession, China has loosed the genie. Expectations of prosperity have been allowed to grow virally since the Clinton years. But we're also seeing China's state-controlled brand of capitalism get outflanked. How long will China pay top dollar to stockpile petroleum feedstocks and metal ores? I expect the "Old Order's" capacity to impose a hardline military-police state will be re-tested and will again succeed.


I am afraid that you misread my comments about military I.Q. tests from my previous post, Anon now 12:16. I am amused but not surprised that you ignored the bulk of my comments and supporting studies and fastened on this one point.

I was merely saying that the American military uses filters such as the ones you pointed to in order to identify the folks they need. (Incidentally, the reason for a greater number of Southerners in the military might have a lot more to do with our honor culture than economic advancement—Southerners on average are more violent than other Americans, see *Culture of Honor: The Psychology of Violence in the South,* by Richard E. Nisbett and Dov Cohen.) These filters bring in a range of people suited to doing certain jobs. But they can also bring a certain homogeneity in terms of ability of the soldiers and sailors to relate to each other. I am not saying that the tests make people alike in terms of ethnicity or race. These filters might very well make the overall group more homogeneous in terms of social and economic class thereby reducing friction. The same point can be made for married couples. Couples who are more alike in every respect, except gender obviously, are more likely to have a happy marriage and this includes level of intelligence. That and other similarities do not erase “the Difference” with an accent aigu, viz. the sexual difference.

What is true, generally speaking—there are exceptions, in marriage is true of other relationships. Greater similarity breeds greater harmony, cooperation, empathy, and happiness. From every indication that holds true in the workplace as well. That is where Asia and Europe have an advantage on us.


Well, Anon 5:51, as I mentioned it's quite a bold theory and a big subject. If I didn't address parts of your theory it's because it could be a book length feature.

"I am not saying that the tests make people alike in terms of ethnicity or race."

......... Early on, as you described the after biz hours tendency to clan together, "likes with likes" I was fairly sure that your (and your author's) observations were based on readily observed similarities.

Truth is I'm not sure what you are claiming. In the military with training time at a premium, it makes sense to select mechanics from those with high mechanical aptitude scores (though many with the same attributes are equally likely to be snapped up by the Infantry) and in civilian life, surely we'd see similar results as those of mechanical aptitudes self-selected to engineering or other tasks that came easier to them. But do we see bowling leagues or golf foursomes made up of mechanics? or engineers??

Hmmmm? Southerners more violent than "other Americans?" I have noticed somewhat higher crime and violent crime in some of the southern states and found it puzzling given that the same states have some of the highest rates of Christian church membership and participation. Will leave this for now, though annecdotally from the 60's the volunteers were largely from southern areas where getting a decent job was a tough assignment, while the draftees tended to be hauled out of better circumstances, good jobs on the coast or mid-way through college. And, perhaps there is something of a military tradition, though I suspect it's largely at the officer corp level.

Not sure what you're getting at here and NOT buying the theory of likes making the best marriages either. In fact I suspect that sexual or other selection, tends to have large guys seeking small or average sized mates, those of fair skin attracted to those of darker hues, and the "wallflower" being attracted to the life of the party. Have you noticed that since many of the taboos have fallen the number of "black/white" marriages?

"Similarity" breeds harmony? I guess we'd have to, at least, define "similarity" and decide whether "harmony" included "bored to numbness" but again, I doubt there is such a case to be made.

Hmmm, "Asia........ having the edge?" I've greatly admired Japan and later S Korea for what they've done with their small densely populated nations that are lacking in natural resources, while the US seems to muddle along wasting much of the advantage we have in natural resources, including that of not having nearby enemies and the oceans making it very difficult for others to threaten our security. But! my guess is that our inherent wealth has tended to make us "fat dumb and happy" with a considerable tolerance for the blatant corruption that's becoming visible now that the tide has gone out.

Given the geographical mobility of our population combined with a falling, but still possible, upward mobility I doubt it's possible to claim that our failures are due to a lack of (some sort of?) homogeneity with the troops squabbling on the job.

Some years ago (pre-Thatcher) I chided the UK for being a nation where the "chosen" didn't work because they KNEW they were going to manage the bank, while those not chosen, opted to party as they KNEW their glass ceiling was at foreman level, regardless. Today the same sickness is much of what is wrong with what's left of the US.

Ahhh, the EU! WHAT ARE those "socialist" rascals doing? Geez they've integrated Spain and Portugal (their Mexico) into the EU, have health care not resulting in bankruptcy for all, and take a month plus a BUNCH of holidays off each year. "Funny" thing those French workers in their overcrowded, worn out nation of few natural resources maintaining a higher level of productivity per hour worked than his American counterpart.

But, of course, we'd have to consider the effects MORE equitable education system, universal H/C, being more rested with something to look forward too and NOT bearing the burdens of casual warmongering along with maintaining the largest and most costly wermacht in the world before assuming that all those French, Muslims, Spaniards etc. are doing well because they are as alike as peas in a pod.

I'd say you've a long, uphill slog ahead in trying to make your case. Jack


Thanks, Jack, for your reply to my previous reply to you. I see both Asia and Europe as more desirable in many ways that the U.S. I am glad that you noticed that the French are more productive per worker per hour than American workers. I would attribute their higher quality of life more to a less hyper-competitive, more genteel, refined culture. I do not have a study on that to buttress my impression. But I do really like France. The socialism might curb some of the more competitive tendencies in people. It might also simply reflect their preferences that would be present in any case. I do think that a less linguistically, racially, and ethically diverse population encourages a less dissonant social climate. Consider the linguistic divide in Belgium and the resulting hostility and alienation there.

As for harmonious, happy marriages being more likely if likes marry rather than opposites, consider the American Psychological Association study on this very issue from a psychologist at the University of Iowa.


The authors distinguish between similarity in "attitudes" and similarity in "personality," which they offer measures of each. The authors find that similarity in the latter set of characteristics predicts happy marriages but the former does not. People tend to marry based on a brief time of acquaintance and conclude that similarities in beliefs breed success in marriage. Unfortunately, that is not necessarily the case at all. The key to marital happiness is similarity in personality traits, which can take longer to detect and appreciate in dating relationships. The couples who evidenced similarity in personality traits were the most happily married. I can verify this analysis from personal experience. I was married to a woman who shared my personal beliefs, but the marriage ended in divorce due to temperamental differences. My most rewarding relationships with women have been with liberal women whom I constantly shock as we argue over politics. We are different in beliefs but share temperamental and personality traits.



Grow influencing the leverage of such numbers.


I am disappointed in the posner blog in the sense that he has managed to talk about the Asian economies with out even a cursory mention of India!!!


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Your post spends far, far too much time on the mercantilism issue, which is only one part of the Asian growth story over the last five or six decades. By the same token, the relative decline of the US will not occur merely because some Asian countries are holding extra dollars. We fail to save, we fail to study and we fail to reward scientific and technical ingenuity. Complaining about currency manipulation won't change that, and won't save us. I suggest you think harder about the relative ascent of Asia.


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Great! Thank you!

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