One other reason I could suggest for Chicago’s success is not only its fortuity in being located in the US, but also it’s geographic location within. Rail traffic from the Pacific Northwest heading back east runs into the Great Lakes. Chicago is the pinch point. We’re a rail hub for a good reason.

I guess that it was bound to happen here, sooner or later. However, I doubt that American’s of any stripe will allow themselves to be raped in such a fashion for so long.

It’s not by accident or coincidence that the 2nd Amendment follows the 1st….

Best regards,

Econolicious

Argentina had a huge influx of Italians around the turn of the century-who were only interested in making a quick fortune and then returning to Europe. Not the kind of immigration one would select to build ‘social capital’: all the blocking and tackling around deferring gratification, fitting in to a new culture, cultivating the family, valuing education and investing in the fortunes of the next generation.

2) Australia IS ‘colonised’ by the US, at least in terms of the degree of penetration by the entertainment-industrial complex, and the influence of Wall Street and its values upon our capital markets over the last two decades (when we began to tack away from our British bearings). But this is counterbalanced by the citizenry’s innate skepticism, dating from the country’s origins, eg to authority, big business, etc

3) Aus corporates: Telstra (originally govt owned monopoly; ‘check’), Commonwealth Bank (originally govt owned dominant player; ‘check’), BHP (incorporated 1885; negative), QANTAS (originally govt owned monopoly; ‘check’)

btw, agree completely with your argument and model against Krugman’s pitch for a second stimulus

Somehow a middle class developed in Australia and asserted a series of political rights that allowed for both stable government and stable property rights. The same thing happened in the other three locations where British colonists destroyed the indigenous population: Canada, New Zealand, and the US. Indeed, of the four I would suggest that the US has had by far the least stable run; we are the only one that fought a civil war.

Meanwhile, not a single Spanish colony managed to build a middle class, despite several having excellent natural resources (Chile, Argentina) and few having any wars with external foes.

What did the Spanish do differently? Well, in Central America they did not wipe out the indigenous population, so the control falls apart; Britain failed spectacularly from Rhodesia to India. But at the tip of South America there were few people to block the Spanish advance, and the sheer numbers of immigrants soon enough overwhelmed the locals. So why didn’t a middle class emerge? Why was the ancien regime able to hold power until the country rotted, where other countries were able to adjust more positively? Why didn’t technology and industrialization create an merchant class that claimed its rights?

Glaeser suggests education. I say sure, and perhaps the decision to prioritize education comes from some other cultural value we cannot pin down. I’d like to hear your thoughts.

As for the Australian economy matters, I would hardly suggest the US ever focused on colonizing Australia. We don’t often think about other countries; that’s what makes it so tough to be our ally. Just ask Canada. It’s hard to sleep next to a hippo, even a well-intentioned one. At least since WWII – since Australia turned from orbit around Britain to orbit around the US – I think there has been a significant effort to intervene to maintain a modicum of distinctness and distance.

BHP, Telstra, QANTAS, Commbank…the national champions in each sector have both had massive levels of influence and long considered some sort of public interest mandate. To take the QANTAS example you cite, the government protects them on the Kangaroo and Pacific routes and QANTAS operates a far more dense domestic network than a self-interested near-monopoly might otherwise.

The recent emergence of a similar phenomenon in the US is the product of eight years of a Bush DoJ that refused to spell the word “a-n-t-i-t-r-u-s-t”. I fear for what this lapse will do to us; if the universal banks are any guide, we shall see the same concentration as Australia without even the fig leaf of kindness toward host and customers.

http://deadcatsbouncing.blogspot.com/2009/10/fs.html

2) The state intervention you call out-this has a lot more to do with Australia’s socialist past than a ‘fear of being overrun by the United States’. In any case, the US was focused on Europe and containng the USSR after 1945-not on maximising US cultural ‘exports’.

3) ‘National champions’: Australia is a market consisting of oligopolies in most industries, eg 2 airlines, 2 grocery retailers, 4 banks, 2 P&C insurers, 2 wealth/life insurers. Suggest this is a function of a small population and local market more than a penchant for ‘national champions’. btw, QANTAS, which used to be state owned, kept its nose out of politics and policy; only recently under the departed kleptocrat Geoff Dixon, did it conspire with the Federal govt. to confine the Syd-LA route (along with London, represents 60% of profits) to two carriers-United and itself.
National champions: suggest you have much bigger targets in the USA: eg, Citi, JPMorganChase, GS, BoA, MorganStanley.