The Price of Prestige

A blog about business and economics.
Aug. 3 2012 3:35 PM

The Price of Prestige

148780646
The space shuttle Enterprise

Bill Ingalls/NASA via Getty Images

Ryan Cooper asked the other day why smaller countries seem to run better macroeconomic stabilization policy, and conjectured it has something to do with the fact that they don't have such large banks. I think this is a multifaceted issue that extends beyond the narrow confines of monetary policy. When the world was more protectionist, big countries had the big advantage of a large internal market. But in today's world I think small countries are generally better-governed and have a brighter outlook going forward.

One reason is that small countries have less incentive to waste resources on prestige schemes. India, for example, can't keep electricity on in major cities but is planning to land a rover on Mars next year. If India was small, it would just be a small poor country trying to improve its shaky domestic infrastructure. But since India is big, it has great power aspirations notwithstanding its poverty. So they want to have a space program. Here in America, logic would say that since we're so much bigger than Canada we could get away with dedicating a smaller share of our national output to the military. But instead we dedicate a bigger share because we can realistically aspire to global military hegemony in a way that Canada can't. China is trying really hard to "win" the Olympic aggregate medal count.

Advertisement

None of that's 100 percent relevant to Cooper's question, but I do think it's plausible to think of a "strong dollar" (or euro or yen) policy as a costly national prestige project similar to a Mars mission or an aircraft carrier or a bunch of gold medals.

UPDATE:

Thanks to Kieran Healy for alerting me to the above relevant text.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

TODAY IN SLATE

Foreigners

More Than Scottish Pride

Scotland’s referendum isn’t about nationalism. It’s about a system that failed, and a new generation looking to take a chance on itself. 

Yes, Black Families Tend to Spank More. That Doesn’t Mean It’s Good for Black Kids.

Why Greenland’s “Dark Snow” Should Worry You

If You’re Outraged by the NFL, Follow This Satirical Blowhard on Twitter

The Best Way to Organize Your Fridge

Politics

The GOP’s Focus on Fake Problems

Why candidates like Scott Walker are building campaigns on drug tests for the poor and voter ID laws.

Sports Nut

Giving Up on Goodell

How the NFL lost the trust of its most loyal reporters.

Is It Worth Paying Full Price for the iPhone 6 to Keep Your Unlimited Data Plan? We Crunch the Numbers.

Farewell! Emily Bazelon on What She Will Miss About Slate.

  News & Politics
Weigel
Sept. 16 2014 7:03 PM Kansas Secretary of State Loses Battle to Protect Senator From Tough Race
  Business
Moneybox
Sept. 16 2014 4:16 PM The iPhone 6 Marks a Fresh Chance for Wireless Carriers to Kill Your Unlimited Data
  Life
The Eye
Sept. 16 2014 12:20 PM These Outdoor Cat Shelters Have More Style Than the Average Home
  Double X
The XX Factor
Sept. 15 2014 3:31 PM My Year As an Abortion Doula
  Slate Plus
Slate Plus Video
Sept. 16 2014 2:06 PM A Farewell From Emily Bazelon The former senior editor talks about her very first Slate pitch and says goodbye to the magazine.
  Arts
Brow Beat
Sept. 16 2014 6:23 PM Bryan Cranston Reenacts Baseball’s Best Moments to Promote the Upcoming Postseason
  Technology
Future Tense
Sept. 16 2014 6:40 PM This iPhone 6 Feature Will Change Weather Forecasting
  Health & Science
Science
Sept. 16 2014 4:09 PM It’s All Connected What links creativity, conspiracy theories, and delusions? A phenomenon called apophenia.
  Sports
Sports Nut
Sept. 15 2014 9:05 PM Giving Up on Goodell How the NFL lost the trust of its most loyal reporters.