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Stiglitz notion that foreign advisors feel superior to the locals, is by no means new. This account of a perceptive Italian Merchant in 16th century India suggests that European did something similar back then.
"The Florentine Piero Strozzi, was willing in 1510 to write of the Muslim merchants of Goa, 'We believe ourselves to be the most astute men that one can encounter, and the people here surpass us in everything. And there are Moorish merchants worth 400,000 to 500,000 ducats. And they can do better calculations by memory than we can do with the pen. And they mock us, and it seems to me they are superior to us in countless things, save with sword in hand, which they cannot resist'."

Sanjay Subrahmanyam, "'Um bom homen de tratar': Piero Strozzi, a Florentine in Portuguese Asia, 1510-1522," Journal of European Economic History, XVI(3).


  1. Contrary to what people think, this is not a race thing; it's a power thing. In Ireland we realised that you don't have to be a silly little brown person for half-educated foreign advisers with chips on their shoulders to storm into your country and start dictating terms as if you were lesser mortals.

    Power hides a man's incompetence like nothing else in this world. And institutions of power know well that men of little substance make the best apparatchiks.

  2. hey, sorry to post this on an unrelated post but the post I tried to comment on was closed. anyway, do you know anything more about the hesa speakers series you mentioned a few days ago? where the things are held, for instance? the hesa site doesn't look like its been updated in a long time. thanks

    1. At the econ dept at the University of Utah. There is more infor here

  3. He should be more surprised, even "with sword in had" European superiority is a very recent thing. I believe that European medieval warfare was not that advanced...

  4. The Illusionist,
    Your government decided to guarantee 100% of the liabilities of their cronies' failed banks and you are now complaining that foreigners come to dictate terms to Ireland! That was funny indeed.

    1. You don't think there was external pressures? You don't think that the German and French banks were scared that there might be spillover effects if the Irish government didn't prop up the banks?

      You have no idea what you're talking about, buddy. No idea at all.

    2. The mainstream (and their surrogates at the IMF) tend to assume away any kind of power relation. You know markets are environments for an infinite number of infinitesimally small agents with no power. In some cases, it is just naiveté and uncritical acceptance of the stuff they've got at the university. But not always.

    3. "You have no idea what you're talking about, buddy. No idea at all."

      The Irish government did it because it did not understand the consequences of guaranteeing all the liabilities of the banks. It was sheer incompetence. It was an unforced error. It was tragic. And it was Irish-bred. Read your country mate Kevin O'Rourke.

      As for the pressures, you underestimate your government's ability to choose Ireland's own path. The rest of Europe threw their weight pressuring Ireland to make an adjustment through increased taxes and hell no, your government chose to cut expenditures.

    4. In all fairness, to blame the Irish in general, for certain policies pursued by the government is dangerous. The Irish crisis, like the one in the US, involved a bubble that was fostered by deregulation and the euro project. Also, it is worth remembering that Ireland was the case used to justify "expansionary fiscal contractions." The idea that more taxes would have resolved the problems again misses the point that once you've got on the euro you have foreign debt rather than domestic debt. Foreign debt depends on exports, not taxes, and the fiscal crisis is a result of the external problems.

  5. Ireland was forced by the ECB to guarantee bank liabilities. That is well known. Read the articles by Morgan Kelly. Nothing more to say after that.

  6. "Ireland was forced by the ECB to guarantee bank liabilities. That is well known. Read the articles by Morgan Kelly. Nothing more to say after that."

    That is a sorry excuse. When the EU 'forces' Ireland to have higher corporate taxes, the Irish do not comply. Is there another EU country that was 'forced' to guarantee 100% of the liabilities of failing banks? That expands the boundary of bad policy.

  7. As Morgan Kelly said (

    "Ireland faced a painful choice between imposing a resolution on banks that were too big to save or becoming insolvent, and, for whatever reason, chose the latter."

    I guess this closes the discussion, no?

  8. I will not defend the choices made by the Irish government. They were the wrong ones. But they were not "free" at the moment of choosing. The alternative was to leave the Euro. I would have preferred that one. But they were put in that position because of the action of the ECB and the Germans (and Kelly's piece is excellent in describing this process). The ECB didn't allow to save the banks and pressured Ireland to take the actions they took. Ignoring that is simply ridiculous.

  9. Poor Bertie Ahern, poor Brian Cowen… Under so much pressure to bankrupt their country… They just could not say no, with all the warships ready to obliterate Dublin…

    Talking seriously, it was an unforced, unexpected, error. Nobody in the financial industry expected that the government of Ireland issued a blanket guarantee to Irish banks. They did it and if people like Kevin O’Rourke are right (they are!), they did it out of lack of understanding of the risks of their actions. In other words, they did it as fools.


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