North Korea, East Germany, . . . California

Andrew Sullivan passes on this amusing line from James Pethokoukis:


We’ve had some eye-opening natural economic experiments: North and South Korea. East and West Germany. California and Texas. Enough is enough.


I don’t quite see the parallel here. I’ve heard that North Korea isn’t such a fun place and neither was East Germany. But I’ve been to California and it’s pretty nice.

In all seriousness, what interests me about this quote is the way that two completely opposite arguments are being juxtaposed:

1. Life sucks in North Korea. Life sucked in East Germany. Communism sucks, and one piece of evidence for this is that life sucks in communist countries.

2. They have it too easy in California. California-ism sucks because Californians spend like grasshoppers and enjoy themselves too much.

Argument 1 seems pretty strong to me. (Not perfect—-after all, communism isn’t really such a natural experiment—-but the point still seems pretty clear. ) Argument 2, though, . . . it’s possible, it certainly could be that some of the things that make California so nice might also create problems later on, but it’s basically the opposite of the first argument. I could imagine a partisan of North Korea (Lanny Davis, maybe? Is he available?) arguing that North Korea is more Texas-like, saving and investing in defense, whereas South Korea is like California, blowing it all on consumer goods. I’m not saying I agree with Mr. Davis on this one, I just find it interesting to see the two arguments going in opposite directions.

Why do I bother to write on this? Because, whatever one might think of James Pethokoukis, I think this general argument comes up a lot. On one hand, the success of an economy is associated with people’s standard of living. On the other hand, if you are ideologically opposed to some country’s policies (or some state’s politics), you can flip it around and argue that a high standard of living is actually a bad sign, indicating profligacy. It’s not so often that we’re lucky enough to see both these opposing claims in the same sentence.



I don't think the regulatory approach is what we want. Regulations come across as controlling and threatening and the agent is more than likely to game them to his own benefit. Joseph Nye's use of soft power looks at it from the other direction. Learn from bacteria: if we threaten them they develop resistance; if we alter their environment in a non-threatening way they are more than likely to adapt commensally. All living things adapt to changes in their environments; the problem is to guide them toward healthy adaptations for the community rather than survival adaptations like resistant bacteria.

Bottom line: try to use another word instead of regulation--small non-threatening environmental changes are what is needed. Then wait and see how the agent adapts.

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