Ricardos & Smiths

In the realm of economics, business and politics, one of the most difficult concepts for the regular person unschooled in international economics to comprehend (please forgive the patrician demeanor) is the wealth-producing effect of trade and comparative advantage.  Everyone benefits.

In rich countries, political leaders by and large support free trade (on both sides of the aisle, to use the American phraseology), but they do a poor job of communicating this difficult concept.  And while it may be difficult, Russ Roberts demonstrates that it can be communicated clearly.  He obviously has notes as he does this podcast, but I do not believe he is reading from a script, which makes this all the more impressive.  Further, his passion and the sheer amazement, delight and hope that these ideas can bring shine through quite clearly.

This is important.  Do yourself a favor and listen.  Even if you are already well-versed in these subjects, Roberts’ way of telling the story deserves your attention.  We all need to be able to tell this story as well as he does.  Over and over and over again.

Also available here and on iTunes (2/8/10 episode).

Published in: on March 4, 2010 at 20:00  Leave a Comment  
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Mired In A Slough Of Despond

Ah, Neighbour Christian, where are you now?

Truly, said Christian, I do not know.¹

Markets up, markets down, dollar up, dollar down, jobs up, unemployment down, sovereign concerns, hot money flows, oil, copper and gold.  Where do we go from here?  Where is HELP!


China Impoverishes The World?

The last post on LUV got the Cowboy thinking about China’s internal focus.

As the Cowboy has stated:

“Given that the Chinese economy is already focused on exports anyway (like Germany and Japan), the currency manipulation just adds to the current account surplus, putting more foreign currency in the hands of the government.  This is money (or stored value) that is being saved by the country as a whole.  If the Chinese consumed more, there would be less production available for export, they would import more and, with a freely floating currency, you might eventually reach a current account balance.  As for a black market, the Chinese government has been pretty effective at keeping it to a minimum.  All of this begs the next question though.  Why would the Chinese government intentionally make its people worse off, allowing them to buy less and forcing them to save more, especially given how poor most of its population is?”

Go to the post (and the following parts) if you want the Cowboy’s answer to that question.

And as a wise friend reminded the Cowboy yesterday, it was Keynes who said:

“If you owe your bank a hundred pounds, you have a problem. But if you owe a million, it has.”¹

Well, get a load of Arvind Subramanian‘s piece in yesterday’s FT.  I know, I know, that’s two consecutive posts linking to the FT, behind its pay-wall.  Sorry.  The article is entitled: “It Is The Poor Who Pay For The Weak Renminbi”.


Published in: on February 5, 2010 at 22:02  Leave a Comment  


Here’s the soundtrack for today’s post (blatantly taken from a previous post.. or two).

As is so often the case, Wolf beautifully summarized the economic ennui at Davos this year.

As an aside, the Cowboy  enjoyed the coinage attributed to Sir Martin Sorrell (of WPP fame) for describing the global recovery.  You will remember the alpha-pictorial discussions of the last couple of years relating to economic recovery (U-shaped and so on).  In that context, the world can be described, aptly in the Cowboy’s view, as facing a period of LUV (Europe, North America and emerging economies, respectively).  With Valentine’s Day fast approaching and economic uncertainty abounding, I suppose it is no surprise that Cupid has taken an interest in the dismal science.

Question 1:  Was that Cupid everyone saw cavorting during the wee hours in Davos?

Question2:  Who was he with?

Question 3:  Most important of all, is Cupid a monetarist or a Keynesian?


Published in: on February 4, 2010 at 21:59  Leave a Comment  
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Hippity Hop, Dough Boys

The Cowboy has become a regular listener of EconTalk, Russ Roberts’ podcast from George Mason University.  There has been a link to the site on this blog for some time, in the Money Talks section.  The Cowboy highly recommends it.

Roberts and John Papola have a new project: econstories.tv.    The video project is in the same vein as Roberts’ most recent book, The Price of Everything: A Parable of Possibility and Prosperity.

To make things easy, here’s the background (just some quick and light reading):

And since all things are circular, note that Keynes’ wife, Lydia Lopokova (née Lopukhov), was a dancer with Diaghilev’s Ballets RussesShe and Keynes met during a 1921 London production of Sleeping Beauty, wherein Lopokova danced the role of Aurora and the Lilac Fairy (presumably on different nights).  He was smitten and returned night after night.

Having stared dreamily at his share of Auroras, the Cowboy can sympathize with the poor man’s plight.   Ah, the Grand Pas…


Muddling On

Last week was a good one for Brazil.  We are consistently told that Asia will lead the world out of recession.  Except that’s not the whole headline.  In its entirety it reads: Asia and Brazil will lead the world out of recession.

Chicago #4.  Tokyo?  No way José (that’s the Portuguese pronunciation please – zhoze).  Spain?  European colonialists need not apply in the post-post-colonial era.  Não, não, não. In 2016 Rio will host the Olympics!

And if you are into those frivolous little sporting events, take note:  Brazil will host the World Cup in 2014.

Of course in the post-post-colonial era, globalization-epitomizing economic involvement is bem.  Mostly.  So how about the hottest IPO of the year…  any guesses?  Banco Santander.  Like the first headline though, we’re missing the important bit: Banco Santander Brasil.  Suddenly its São Paolo-based sub looks like the most valuable part of that Spanish empire.  And lest the irony be overlooked, Brazil is providing the lucre for a 21st century Spanish empire.  In your face, Portugal.


Published in: on October 14, 2009 at 21:51  Leave a Comment  
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Who Knew?

It’s been a year since Lehman Brothers, that age-old, proud Wall Street institution was destroyed.  Hmm.  Well not quite.  The Lehman Brothers that went under was created in 1994, making it a venerable 15-year old institution.  The original Lehman was acquired by American Express’s Shearson unit in 1984.  Shearson Lehman (Hutton) was a far cry from the powerful institution Lehman had once been.  Amex and Shearson ran the show.  Shearson later bought what was left of EF Hutton after it collapsed in the wake of the 1987 crash, making it an amalgam of several prior firms owned by a large diversified corporation.  It’s a testament to the new Lehman, however, that it was able to become such a significant player over that 15-year period.  Well, 15-minus-one year period.  It’s an interesting history.  Who knew things would get so bad…


Published in: on September 16, 2009 at 19:33  Leave a Comment  
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The Color of Hope

This has been a family favorite for some time.  The song took the Spanish-speaking world by storm a few years ago.  Here’s the MTV Unplugged version from 2004, performed in Buenos Aires.

The Cowboy gave a lecture last week on geographic variations in the Spanish language and the influences of immigration and indigenous peoples on the development thereof. He played this music at the end of the lecture to highlight the societal and historical differences, various influences, and distinct forms of cultural miscegenation that are present in the Spanish-speaking world. It may not be the best of examples, but it’s not a bad one either.


Published in: on July 10, 2009 at 16:00  Comments Off on The Color of Hope  
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Life Is A Cabaret, Old Chum

It’s been a busy week.  Time to go to the cabaret.


Published in: on May 22, 2009 at 22:24  Comments Off on Life Is A Cabaret, Old Chum  
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Holy Zhao! 趙紫陽

This is the most astounding news the Cowboy has heard in a while. 


Published in: on May 14, 2009 at 20:56  Comments Off on Holy Zhao! 趙紫陽  
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