A grander tour
I HAVE been reading a new book on economic history. Cambridge University Press recently published “The Cambridge Economic History of Modern Britain” (CEHMB). It is highly recommended. The first edition of the CEHMB was published in 1981 (a few people in the office wistfully remember using that version at graduate school). The CEHMB is in the same mould as the "Cambridge History of Capitalism" (CHC), which we reviewed a few weeks ago .
This is the startling claim made by two Chinese government researchers that has, understandably, caused quite a stir . If true, it would mean that fully 37% of Chinese investment since 2009 was wasted on building bridges to nowhere and homes with no one in them. There is, without question, plenty of worrying evidence that Chinese investment has become less efficient in recent years. But a closer look at how the researchers produced the $6.8 trillion figure badly damages their claim. Calling it a back-of-the-envelope estimate would be undeserved praise.
How strong is it?
The authors were intrigued by the difference in the behaviour of house prices between the Netherlands and Germany. Between 1985 and 2013 German house prices were tepid in comparison with those next door: Dutch house prices virtually tripled in real terms between 1985 and 2008, before declining sharply. These variations have several causes: German housing supply is more responsive than Dutch supply; the German rental market is far more developed; mortgage-interest payments are tax-deductible on the orange side of the countries’ shared 500km border, and not in Germany. For the rational-minded, gaps this wide raise questions. If it is far cheaper to buy a house in Germany, shouldn’t the Dutch take advantage and purchase property there?...