Comment by testrun

You are saying planning never works without even the ability to point to any specific cases. Why do you swallow your own ideology so uncritically?

Does Soviet-style central planning work? It didn't seem to work well in the few societies that really tried it.

Dos all planning fail? Seems unlikely, given the amount of fairly centralized planning that went on (and still goes on today) in East Asian countries, countries that are the rare "success stories" of developmental economics.

In fact the original East Asian success story was Meiji-era Japan, basically the only society outside of the West that managed to industrialize itself during the 19th century. And if one sits down to read a history book one quickly realizes that what the Meiji government did was highly top-down and planned with the explicit goal to catch up to the European colonial powers. It did not resemble classical laissez-faire economics.

The book.

I'm trying to pull some things together.

Mostly, a big part of the book is just a warming up of the tired 'Infant Industry argument'. See https://en.wikipedia.org/wiki/Infant_industry_argument

For now, have a look at https://mises.org/journal-libertarian-studies/prejudice-free... to get an alternative look at Malaysia, one of the recurring example in 'How Asia Works'. (That paper is also just a really good read by itself.)

I don't particularly like Noah Smith (he's also in favour of protectionism and 'industrial policy'), but his https://www.noahpinion.blog/p/the-polandmalaysia-model has some good points also about Malaysia.

https://www.amazon.com/Just-Get-Out-Way-Government/dp/193086... is an alternative view at development economics. The title is a bit provocative, (even the author wasn't really happy with it, when I had a chat with him about it). The main thesis of the book is that honest and competent civil servants are the most rare and precious resource a country has, especially a poor one, so policies should economies on their labour.

So eg you should privatise a state-owned company by auctioning it off in one piece to the highest cash-bidder open to all comers from anywhere, no questions asked. Instead of having your civil servants set up a complex system or worse trying to evaluate proposed business plans. Complexity breeds corruption in the worst case, and in the best case still takes up civil servants' limited time.

Directly about 'How Asia Works' https://www.astralcodexten.com/p/book-review-how-asia-works mentions some critiques in the 'Conclusion' section. See also https://open.substack.com/pub/astralcodexten/p/book-review-h...

'How Asia works' describes the historical record of some examples, yes.

There are some correlations between various factors and 'success'. Alas, it's hard to tease out which of the correlations, if any, are causal factors, and which are just coincidences, or worse. [0]

The book guesses at some of these causal factors, and makes policy recommendations.

I am mostly not really convinced by the full list of causal factors the book presents. On the one hand, the book observes protectionism and argues that it's a causal factor in promoting prosperity. That's just the old and tired 'Infant Industry Argument', so we should require quite some evidence to take it serious. On the other hand, the book ignores the possible impact of having lots of ethnically Chinese people in your country. (I don't know for sure whether that's a causal factor, but it sure looks noteworthy and deserves at least as much consideration and discussion any of the other factors.)

I also think the book is too quick to dismiss Hong Kong and especially Singapore. Singapore did not start out as a financial centre, and especially early on manufacturing was much more important here.

> What (particular?) "economic orthodoxy" would you suggest countries follow?

Much of what the successful countries examined in the book have been doing is worth following.

In any case, if you want an orthodox policy recommendation: the Washington Consensus was pretty decent. Lots of examples there.

Well, to be precise: Washington Consensus with the crucial addition that your central bank (if you have one) should be doing something like nominal GDP level targeting.

What that means is that the total nominal spending in your economy needs to be on a stable path. Don't let it grow too much, or you get inflation and overheat the economy. Don't let it collapse, or you get a recession.

See Scott Sumner's or George Selgin's writing for why that's really important and how that can work. (And why it's more sensible than targeting inflation.)

As a cautionary tale, look at Argentina. They were doing fairly well during their neoliberal / Washington consensus phase, but their currency arrangements led to a collapse of aggregate nominal spending in the economy. Alas, the subsequent recession was blamed on neoliberalism.

For examples with stable total spending, have a look at Israel or Australia. (At least until a few years ago, I haven't checked recently.) Both countries' nominal stability let them avoid recessions. Australia is especially noteworthy, because as a resource exporter you'd expect their economic fortunes to be as volatile as commodity prices. See https://marketmonetarist.com/2012/11/19/the-export-price-nor... for an investigation.

https://www.amazon.com/Just-Get-Out-Way-Government/dp/193086... is an alternative view at development economics. The title is a bit provocative, (even the author wasn't really happy with it, when I had a chat with him about it). The main thesis of the book is that honest and competent civil servants are the most rare and precious resource a country has, especially a poor one, so policies should economies on their labour.

So eg you should privatise a state-owned company by auctioning it off in one piece to the highest cash-bidder open to all comers from anywhere, no questions asked. Instead of having your civil servants set up a complex system or worse trying to evaluate proposed business plans. Complexity breeds corruption in the worst case, and in the best case still takes up civil servants' limited time.

See also https://www.econlib.org/library/Enc/GermanEconomicMiracle.ht... for some recommendations.

[0] When I say 'worse', I have in mind an example like: empirically we can observe a strong correlation between personal wealth and owning a fancy car. Alas, that doesn't mean getting yourself a fancy car will make you rich. Just the opposite, in fact.