China’s Growth in GDP

chinese_flagOur Principles of Macroeconomic classes have been learning more about GDP – how it is measured, and what levels of GDP growth are sustainable. The New York Times reported significant growth in GDP for China for the 4th quarter and all of 2010…

China’s economy grew at a higher-than-expected rate of 9.8 percent in the fourth quarter and inflation eased only moderately last month, China’s National Bureau of Statistics said Thursday.

The agency said the economy grew at a rate of 10.3 percent for the full year, while the rate of inflation was 3.3 percent. Inflation fell in December to 4.8 percent, from 5.1 percent in November. G.D.P. growth rose from 9.6 percent in the third quarter and topped the 9.2 percent forecast by market analysts surveyed by Reuters.

The report did little to quell concern that China’s economy was growing at an unsustainable pace.

Are we losing faith that hard work brings success?

I have recently been thinking about differences in values held by people in high income countries with big governments and those with smaller governments. In my last post I looked at evidence from the World Values Survey of differences in qualities that people consider are important for children to learn. One of the differences noted was that people in countries with relatively small governments tend to place more emphasis on hard work as an important characteristic to encourage in children. In this post I look at more evidence relating to beliefs about hard work.

The survey question I am looking at requires respondents to assign a value from one to ten depending on whether their beliefs are closer to the proposition that ‘in the long run, hard work usually brings a better life’ (1) or ‘hard work doesn´t generally bring success – it´s more a matter of luck and connections’ (10). I have focused on the percentages who are most optimistic that hard work brings success, looking at population averages and averages for young people aged 15 – 29.

As in the last post I have focused on 14 high-income countries with broadly similar European cultural heritage for which data is available from the most recent World Values Survey. The results are presented in the table below, along with the data in my last post on the importance for children to learn the virtue of hard work. As in the last post, the five highest percentages for each variable are shown against a red background and the five lowest percentages are shown against a blue background.

As might be expected, there seems to be a reasonably close correspondence between emphasis on the importance for children to be encouraged to learn the virtue of hard work and the belief that hard work usually brings a better life. People in countries with small governments are more likely to hold those beliefs than those in countries with big governments.

What should we to make of this result? It could mean that incentives associated with big government tend to weaken the work ethic. It could mean that a weakening of the work ethic tends to promote big government. Or, as seems more likely to me, the results might reflect a complex interaction between cultural heritage and changes in beliefs, values, ideologies and economic incentives.

The results in the last column of the table are particularly interesting (and somewhat disturbing to me as an Australian). In most of the countries considered the proportion of young people who are optimistic that hard work brings success is somewhat lower than for the population as a whole. In the case of Australia, however, the difference is more substantial. Closer inspection of the data indicates that the proportion of young Australians who think that success is a matter of luck and connections is also lower than for the population as a whole. So, members of the younger generation are not particularly cynical about the rewards of hard work – they are just markedly less optimistic about this than older generations.

It would be premature to conclude that these results indicate that we are heading toward some kind of brave new world where few people bother to work hard because no-one believes strongly any more that hard work brings success. I need a better understanding of the implications of changes in beliefs about the relationship between hard work and success before reaching any conclusions. If anyone knows where I can find relevant research perhaps they could enlighten me.

Daily Ranking - Most Insured

Daily Beast has Pittsburgh at #11 on a list of most insured places in the nation.

So the question why comes up when this stat pops up and it’s pretty simple.  A combination of Pennsylvania’s CHIP and a lot of folks covered by Medicare together add up for us.  Pennsylvania pops up disproportionately on that list mostly for the same reasons.  York, PA is 7, Scranton 13, Harrisburg 22, Allentown 25.

Economic Events on January 20, 2011

At 8:30 AM EST, the U.S. government will release its weekly Jobless Claims report.  The consensus is that there were 420,000 new jobless claims last week, which would would be 25,000 less than the number released last week.

At 10:00 AM EST, the Existing Home Sales report for December will be released.  The consensus is that existing homes were sold at an annual rate of 4.9 million last month, which would be an increase of 220,000 from last month.

Also at 10:00 AM EST, the Leading Indicators report for December will be released.  The consensus is that this index increased by 0.6% last month, which would be the fifth month of improvement in a row.

Also at 10:00 AM EST, the Philadelphia Fed Survey report for January will be released.  The consensus is that the index will be at 20, which would be an decrease of 4.3 points from the previous month, but still is seen as a healthy number.

At 10:30 AM EST, the weekly Energy Information Administration Natural Gas Report will be released, giving an update on natural gas inventories in the United States.

At 11:00 AM EST, the weekly Energy Information Administration Petroleum Status Report will be released, giving investors an update on oil inventories in the United States.

At 4:30 PM EST, the Federal Reserve will release its Money Supply report, showing the amount of liquidity available in the U.S. economy.

Also at 4:30 PM EST, the Federal Reserve will release its Balance Sheet report, showing the amount of liquidity the Fed has injected into the economy by adding or removing reserves.

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