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Week of February 1, 2009 - February 7, 2009

Hong Kong Holding Its Breath


Not because of smoggy marine-layer haze---one of the world's largest ports is at Dead Slow, almost Full Stop.

I was first here in 1986, and was amazed at the immense fixed cranes for off-loading, which were so large that a container ship simply pulled inside one. Ships typically stacked up outside the harbor, waiting their turn. But as my airplane from Tokyo approached the airport I looked down at nearly empty highways. It was quieter than New Year's day morning, and the expected 90-min. bus ride to our hotel took 40 minutes.

A tour guide chatted on the bus PA, emphasizing the shopping opportunities, and finishing up by encouraging us to help their economy. He was perhaps not clear that we were there to earn, not spend. A forgivable mistake, when US tourists expected bargains and came prepared to buy, in all the good times leading up to now. But I saw a story in the newspaper here that listed the reduction in value of several billionaires' holdings, such as the Kwok family, down from US $ 23 billion in 2008, to only $ 10.9 billion now. Quelle dommage!

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Letter from Tokyo


I have been in Tokyo for the last week for my work, and the wholly different world that is Japan always invokes comparison to other societies. When Maggie Thatcher famously said there was no such thing as society, only families, she surely did not understand anything about reality, or even Great Britain. In Japan this is most evident, but it is true of England as well, and China, too, that society is the main factor in personal choices and morality, not an afterthought.

It's hard to find a genetic explanation for the traditional Japanese practice of hara-kiri, a way of suicide so horrible that it was reserved for the samurai. What could make it possible to kill one's self by slicing one's stomach open, to spill one's bowels? Only the overwhelming pressure of society's expectations could underlie such will power. But the flip side of that is the modern state's contract with its citizens---in exchange for working really hard, and living in a tiny apartment, each can find a place.

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Protectionism Panic Spreads


Now the Wall Street Journal weighs in with their version of conventional wisdom, that Smoot-Hawley deepened the Great Depression. I note it did not precede the Crash of 1929. Correlation tempts one to conclude causation, but the very fact of the finance crowd worrying about it makes me think it is purely self-serving for them. Also, the tariffs were not reduced until we were well out of the depression, at the Bretton Woods meetings. This was followed by GATT, more complete trade agreements.

But if correlation is causation, the proximate events before the Depression were weakening labor and overcapacity, and mainly the collapse of Wall Street. Smoot-Hawley followed, but did not lead. The proximate events of recovery were the New Deal, and mainly WW II. Bretton Woods followed, but did not lead.

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