Wednesday, October 8, 2003

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Capital market liberalization and publishing

My latest Tech Central Station column is up. It's on how economic liberalization beyond trade politics can and should be proceeding. Go check it out.

Oh, and for those interested in whether blogging can lead to writing as a career, Maureen Ryan has a story in the Chicago Tribune on the possibilities and pitfalls of such a trajectory. Various bloggers are quoted.

posted by Dan on 10.08.03 at 03:14 PM


he link requires registation, a monumental pain. However, the issue about blogging is that you're basically giving something away. Top tier, or near top tier bloggers, like Reynolds or Dan himself, can clearly leverage their blog into rewarding opportunities, but the blog itself is always going to be a loss leader.

The success of blogging, it seems to me, derives from the wide distribution and efficiency of the web. A web site that generates traffic but doesn't necessarily qualify as a blog will be just as effective for the purpose of bypassing traditional barriers to entry in the writing field. A blog per se would just be a special case.

However, it, or any other type of loss-leader web site, is worthwhile only insofar as it achieves the result of obtaining the notice, opportunities, or other objective the writer has in mind. I'm not sure if a blog is even the best means to this now, since everyone's seized on it. Since I find, from having commented on maybe half a dozen blogs in the past year or so, people have begun to recognize my name and suggest I get a blog, I'm skeptical -- I think it's a little late in the curve to get recognized that way. I'm thinking about, and in part implementing, other strategies -- we'll see how things pan out.

posted by: John Bruce on 10.08.03 at 03:14 PM [permalink]


A great article but I think they authors you quote are wrong. They're wrong because if you have had any experience with third world capital markets then you also know that corruption and liquidity problems even in the biggest markets can be rife. In addition, political instability makes most of these markets demand a higher risk premium from foreign capital. Plus there is the whole moral hazard issue. Again and again we have seen IMF bailouts essentially converted into foreign capital bailouts on terms disadvantageous to indigenous populations who must pay in austerity measures what a few corrupt businessmen and politicians irresponsibly did in their countries. This "Real World Factor" explains why increasing capital controls stabilizes Third World enconomies. Does it stifle them? Yes. It also places limits on the ability of insiders and speculators to manipulate and leverage the market in order to drain wealth from it artificially or to consolidate control. A good example of the latter is the Russian stock market whose early days basically became the laundry tool and legal billy club for the ogliarchs and eventually prevented the spread of real capitalism. Eliminating capital controls would work great except for one thing - real people. In modernized countries we take for granted strong legal systems, securities regulations, and generally above-the-fray government oversight. In third world countries you got neither rule of law, poor self-regulation, poor transparency, and government officials on the inside of securities scandals.

You get an "A" for effort and economic theoretical modeling, and you get a "D" for real world applications. Sorry Dan, the real world just doesn't work the way it should sometimes.

posted by: Oldman on 10.08.03 at 03:14 PM [permalink]

Thanks, Dan, for the link to the Trib article about bloggers getting jobs in mainstream papers.

1. Does this undermine the function of blogging as a watchdog of mainstream media? You can't be an critical observer if you hope to gain employment some day.
2. Are bloggers being co-opted? Opposition is silenced. New ideas are absorbed and made less radical.
3. How can I cash in?
4. How many bloggers have benefitted? Three?

posted by: Laura on 10.08.03 at 03:14 PM [permalink]

Daniel, have you seen this paper? Pierre-Olivier makes a rather good empirical case that the measureable benefits of capital export liberalization are basically zero.

posted by: Jason McCullough on 10.08.03 at 03:14 PM [permalink]


"Our main finding is that while Þnancial openness increases
domestic welfare, and while this beneÞt can be signiÞcant for some countries, it is not
very large on average. For the typical non-OECD country, the welfare gain from switching
from financial autarky to perfect capital mobility is equivalent to a permanent increase in
consumption of about one percent. This benefit is of the same order of magnitude as the
cost of economic fluctuations (in less developed countries), and of an order of magnitude
smaller than the gains that development economists and policymakers seek to achieve. For
example, we find that eliminating 25 percent of the productivity gap with the United States - a productivity increase smaller than the magnitude experienced in post-war Singapore, Hong-
Kong or Israel - yields a welfare benefit that is more than one hundred times larger!"

posted by: Jason McCullough on 10.08.03 at 03:14 PM [permalink]

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