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October 30, 2019



"...the natural experiment of dividing Korea proves that openness creates prosperity."

South Korean economist Ha-Joon Chang is probably the world's most famous critic of this theory. He thinks South Korea grew its exports while slyly protecting its domestic market, just like Germany and the USA did in the 19th century.


Economists have professed utter mystification at the failure of productivity rises to return following the 2008 crash. To question whether economists are competent to base long-term forecasts on productivity projections is not philistine sniping but valid scepticism.

Andrew D

“My chart hints at what this is. It plots annual growth in world trade (as measured by the CPB) against UK GDP per worker-hour: the data starts in 1997 as this is when monthly GDP data begins. It’s obvious that there’s a strong correlation between the two.”

Your chart shows nothing of sort: In 98-99 and Jan 02 there is a negative correlation,positive in Jan 00 and Jan 09 and in Jan10-Jan 11 a possible positive correlation, it certainly doesn’t give clear support to any of the conclusions you make. It is noticeable how you claim a “good Correlation when any hard scientist would decide there was no such correlation. In a recent article you claimed 0.45 was a “good correlation” most of my scientific colleagues would consider that no correlation-anything less than 0.95 would be rejected (and many would expect 0,99)


@ Georges - yes, S. Korea was highly interventionist, but it was much more integrated into the global economy than the North.
@ Andrew - you're just describing the difference between the social sciences & physics. I've seen correlations much lower than 0.45 described as good in financial economics. Different disciplines have different methods.

Robert S Mitchell

The problem is that GDP is a political statistic that, if compilers were intellectually honest, would have error bars so wide you could tell any story. GDP should not be a consideration in public policy because it is too inaccurate and value-laden. Fetishizing GDP is normative religion.

derrida derider

Your politicians over there seem to have failed Logic 101.

You're correct that NI gaining heaps from having frictionless trade with the UK necessarily implies GB will lose heaps from its self-created frictions. But Raab and Patel seem strangely loath to realise this simple piece of logic.

And Julian Jessop is making the same mistake as the climate denialists. Uncertainty about future estimates of something harmful is an argument for doing MORE, not less, to avoid the harm because the harm increases disproportionately with the size of the effect. A 10% loss of GDP causes much more than twice as much misery as a 5% loss, just as 6 degrees of global warming is much more than twice as catastrophic as a 3 degree one.

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