Years of Poems and Spirits

Hypothesis:

1. If, in the long run, an economy features a liquid financial market, it is likely the economy is efficient.
(Liquidity: index of expected profitability by market participants; Efficiency: rate of utilization of resources and factors)
2. This is so because in general people tend to trust other participants (even at arms length) so there is not lack of credit. Or trust and credit is a necessary condition of an efficient economy.
3. How to prove? The expressway test: sampling all cars’s speed readings on an expressway, the higher the standard deviation (higher variation of speed), the slower the average speed. People don’t know what to expect from other drivers, so drive defensively and cautiously.

Extension:
If the above were true, can the same be said about state and society?
But what is the equivalent of liquidity? Or what is the best index to measure the expected return on participating and submitting by polity participants? Level of participantion?
And what is the best index to measure political harmony? An Utilitarian statement of number of policies that benefit most people?

Reason is the same: trust=participation and participation leads to best outcome. Not quite sure.

What triggered:
In developing countries, many people are skeptical of their governments or people from other domains/communities. This leads to incredibly inefficient political life.

Pakistan said Bhutto was assassinated by al Qaida but speculations abound and no one is happy with the government’s explanation. How is national reconciliation or progress possible?

China’s paper-in-bans newstory: which one is true, who to believe? How can the problem be fixed?

Lippman (via S Huntington) said that the developing countries problem is, “they need to be governed”. Can we say “they need to learn to trust?”

Also links Putnam’s social capital and Foucault’s disciplinary effect: higher social capital=higher self-discipline or submission.

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