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Funding hukou reforms associated with real urbanisation in China

Comments on Cai Fang and Wang Meiyan, Chinese Academy of Social Sciences, and Guo Zhenwei, National Research Institute for Health and Family Planning of China: "A new model of urbanism will help China boost growth", 6/09/2016

It is understandable that a more free and mobile population from both regional and sectorial perspectives will be conducive to national economic growth.

It seems that local governments may also have a more immediate difficulty than purely demand side driven growth in granting guest workers the local resident status, that is, the expenditure needs associated with providing equal public services to them and their families, e.g. kids school education, or social security.

As a result, it should be a top priority for innovative ways to enable local governments the capacities to meet those service needs related to hukou reforms to grant local residence status. Different local government may have different levels of needs, so the central government may need to provide some funding to local governments.

Unless local governments have the financial capacities to fund the services that are required of them by those migrant workers, it would be very difficulty for them to carry out the required reforms to the hukou system to accept the migrant workers as local residents.

White may suffer from illusions on NFU

Comments on Hugh White "A second strike on nuclear ‘no first use’", 6/09/2016

It seems that Professor White may have developed his argument based on possibly incorrect premises.

One is the concept of illusion by US allies. Are those countries really that low intelligence?
The second is the logic that some of the US allies will develop nuclear weapons should the US do a no first use (NFU).
I would question the soundness of both.
A nuclear weapon free world is a much higher goal for all human beings than the possible use of such weapons by a hegemonic sole superpower!


Briexit may not necessarily be as bad as many people think!

Comments on Editors, East Asia Forum "Can Asia shield the world against Europe’s Brexit woes?" 28/06/2016

While there is no question that the Brexit has and will continue to be a source of uncertainty, particularly for financial market, the scenarios presented in this post may appear to be too and overly pessimistic.

While the EU integration in general has been a good thing, the economic woos in some Euro zone economies in the wake of the GFC undoubtedly suggest there is a need for an exit mechanism for a member of an integrated regional organisation, such as the Euro zone or, for that matter EU. Such a mechanism, with good wills and intentions of all involved, would allow the exit of a member with either some difficulties or political determinations.

Such a mechanism should be friendly, as opposed to punitive.

Greece, with its painful economic, political and social problems, would have benefited if a helpful exit mechanism allowed it to use a national currency as an adjustment tool, as opposed to cuts to nominal wages, social securities and pensions.

Married couples may divorce and most countries have laws allow that to happen. Then why not allow a member of an integrated organisation to exit?

We should not just think in only one direction, that is, to integrate with no exist possibility and mechanism. That way of think is problematic itself. And that is one of the key sources of uncertainty in the wake of the Brexit vote outcome.

It is unhelpful and unproductive to blame or complain the Brexit.

I believe that Britain and the EU will negotiate creatively with mutual benefits for a successful Britain exit. They should and will create a workable framework to facilitate the Britain exit.


Changes in the terms of trade should be reflected in GDP measure

Comments on Peter Martin "Election 2016: GDP growth nowhere near as good as it seems, but it'll do for the prime minister", 1/06/2016

It seems there is a need to incorporate the very different effects on the living standard of changes in the terms of trade in the GDP measure. This is because that changes in the terms of trade is quite qualitatively different from changes in domestic relative prices irrespective they are inflationary or deflationary.

While changes in prices generally have the effects of transfering wealth from one group to another, the effects have quite different impacts if they occur through changes in the terms of trade.

Changes in prices purely domestically, the transfer of wealth is within a country and therefore they total wealth of the nation has not changed.

When changes in the terms of trade, the transfer, however, is between two different nations. As a result, the nation's wealth will increase if the terms of trade increases and it will decrease with the deterioration in the nation's terms of of trade.

To conclude, there should be some measure to distinguish these two kind of changes in relative prices to capture the changes in the terms of trade on a nation's living standard for any given real GSP growth as currently measured.

Australian dollar, industry policy and economic transition

Comments on Shiro Armstrong "Asian integration a key part of Australia’s economic transition", 29/05/2016

The author argues that “As the dollar strengthened and productive resources shifted to the mining sector, manufacturing became less competitive and many industries suffered or shut down.”

That can only be partly true, as the falling Australian dollar in recent two years will not in any way to stop the closure of the only remaining car manufacturing plants in Australia.
As a result, there are more important factors than the fluctuating Aussie dollar in determining manufacturing in Australia.
The issues with the future submarines to be manufactured by the France, possibly with some part of that making process in Australia, may not necessarily represent a good policy, if Australia can not maintain a car manufacturing plant while attempts to be part of manufacturing and maintaining submarines. It may be actually a loss if Australia does not have that comparative advantages in doing the submarines, if the standard trade theories are to be believed!
It could be an example of poor industry policy at the taxpayers expense.

Australia do need to find its comparative advantages!