I’m reading the epic The Command of the Ocean: A naval history of Britain, 1649-1815, by NAM Rodger. Its sweep of naval, administrative and social history, and the ways in which the growth and transformation of the Navy permeated so much of the development of Britain as a whole, makes for compelling reading.

It can be dangerous to draw too direct a parallel between events 350 years ago and today, but I read the following with a real sense of recognition:

The Rump Parliament consistently refused to face up to the real cost of naval warfare. A 1654 report by the Revenue Sub-Committee insisted that the annual cost of the Navy ‘at the greatest rate’ amounted to £269,750; in reality it cost nearly three millions in the thirty months of the Dutch War. Bu the end of 1654, the Navy owed at least £600,000.

This might have been thought a bad beginning for another war, but so convinced were Cromwell and his Parliament that a Spanish war must be profitable that they actually reduced taxes in 1655… The political chaos of 1659 completed the ruin of the Navy’s finances. In January 1660 the government was essentially bankrupt, and the Navy needed £2,157,883 to pay off its debts and fit out a Summer Guard.

Sound like any government you know?

Andy Hargadon: “Governments are organized well to build cathedrals, but not bazaars.”

To understand the Google in China news, you need to read Rebecca MacKinnon, who has been covering this beat before anyone else knew it existed. Read the whole post for background and perspective, but here’s a taste:

I don’t like the fact that Google is censoring in China at all. Google spokespeople liken what they do in China to the filtering they do in France and Germany – censoring porn and Nazi sites in compliance with their laws. I do not believe you can compare compliance to laws in democratic societies to what they’re doing in China. In France and Germany, there is some connection between the laws and the user’s consent. People in those countries have the ability to vote out of office the politicians who make unpopular laws. Chinese users have no way of punishing their government for its censorship policies by voting the current group of leaders out of office.

MIT’s Yasheng Huang has an intriguing contrarian essay in today’s Financial Times on the development lessons China could learn from India. No, I didn’t type that the wrong way around. Which is what is interesting about Yasheng’s piece (available to subscribers only).

From April to June 2005, India’s GDP grew at 8.1 per cent, compared with 7.6 per cent in the same period the year before. More impressively, India is achieving this result with just half of China’s level of domestic investment in new factories and equipment, and only 10 per cent of China’s foreign direct investment. While China’s GDP growth in the last two years remained high, in 2003 and 2004 it was investing close to 50 per cent of its GDP in domestic plant and equipment – roughly equivalent to India’s entire GDP. That is higher than any other country, exceeding even China’s own exalted levels in the era of central planning. The evidence is as clear as ever: China’s growth stems from massive accumulation of resources, while India’s growth comes from increasing efficiency.

The microeconomic evidence also casts India in a better light. While India’s stock market has soared in recent years, the opposite has happened in China. In 2001, the Shanghai Stock Market index reached 2,200 points; by 2005, half the wealth wiped out. In April 2005, the Shanghai index stood at 1,135 points. This sharp deterioration occurred against a backdrop of GDP growth exceeding 9 per cent a year. It is difficult to find another country that has this strange combination of superb macroeconomic performance and dismal microeconomic performance. It is a matter of time before the two patterns converge.

Yasheng makes some important points and, like most believers in democracy, I would love it if the world’s largest democracy, India, continued to thrive. But in the interest of polemic, he glosses over some crucial issues.

Here are four, for starters.

1. India’s woeful treatment of women. China is no paragon in this regard, but India is far worse. How long can growth and change be sustained while half the population is underutilized?

2. The caste system. There have been many improvements in India, but caste remains a key issue.

3. Population growth. I don’t particularly approve of China’s coercive policy of one child per family, but it has successfully constrained population growth. India’s growth is comparatively unconstrained. It is not cause for celebration that India’s population will exceed China’s in a few years time.

4. Illiteracy. Last figures I saw, India had twice the illiteracy rate of China (40% v 20%). That’s not a formula for continued economic success.

I truly want India’s current success to continue. But I think there is a far greater danger of complacency about the need for continued reform in India than in China. Yasheng’s article is a useful corrective to unthinking celebration of China’s extraordinary gains over the last 20 years. But he neglected too many important issues to make his polemical point.

Adrian Murdoch: “Who would ask a saint for a holiday recommendation?”

I’m trying to compile a reading list for economics blogs. Dave Winer has been trying to get the idea of reading lists off the ground for a number of years, and it is finally looking like it is getting some traction. I’d love to subscribe to intelligent reading lists from people who really know their fields.

Other people sense the demand for this as well, even if they don’t know what to call it. Martin Varsavsky recently posted about how he’d love to share OPML lists with people.

When I figure out how to get my reading list out of my OPML Editor, I’ll post details here.

Brad DeLong’s Covering the Economy:

Nobody goes into journalism to write bad stories that mislead their readers and omit or downplay the important news of the events that they are covering. Journalists, especially daily journalists have a very difficult job. They are under ferocious deadline pressure. They are beat reporters–which means that they cannot afford to alienate their sources too far, for they have to go back to them again and again. They are dealing with complicated and subtle issues. And at least half the people they talk to are telling them subtle (and sometimes not so subtle) lies.

So what has gone wrong? And how can journalists–and those among their sources who are interested in public education and in raising the level of the debate–make things go right?

We plan to spend about the first six weeks looking at how the bread-and-butter economic news is covered and how it should be covered. What the standard statistical releases suggest about whether the economy is going up, down, or sideways–and what “up,” “down,” and “sideways” mean.