> I can't read anything by Larry Summers without thinking about this article from Naked Capitalism

I'm no fan of Larry Summers, but that article was crap. He was there from 2001-2006, and in 2008 they lost a bunch of money.. which the article says is Summers fault.

You know what Harvard said in 2007 about their fund [0]:

Harvard University’s endowment earned a 23.0 percent return during the fiscal year ending June 30, 2007. With FY07 being one of the best performance years since the inception of Harvard Management Company in 1974 ... In addition to significantly outpacing the University’s total return target, HMC significantly out-performed its internal benchmark. Furthermore, the fiscal 2007 performance compares favorably to that recorded by other large investment management institutions. Specifically, the endowment’s return of 23.0 percent out-performed the median for the 151 large institutional funds as measured by the Trust Universe Comparison Service (17.7 percent), as well as the 20.9 percent that marks the top 5 percentile.

The fund posts record gains, but when the economy tanks and everyone loses money, at Harvard it's Summers fault. If he was as terrible as the article says, they had two years after he left to undo the damage he caused. Instead they waited until the recession hit, then unwound it.

Actions speak louder than works (not to mention story telling after-the-fact when you need a scapegoat).

http://news.harvard.edu/gazette/story/2007/08/harvard-endowm...

Edit: note that the gains in 2007 ($5B) were significantly more than the loses in 2008 ($2B) that summers supposedly caused. Since 2001, the fund nearly doubled(!): http://news.harvard.edu/gazette/2002/09.26/06-endowment.html

If you want to blame Summers, the key was that he allowed or wasn't able to stop the university from purging in 2005 the Harvard Management Company team that had provided their outsized earnings for so long. Although you can't necessarily blame him for making sure their inept replacements didn't squander money after he himself was purged in the following year. (E.g. the lost a billion dollars simply by not noticing one investment was going to hell and ending it.) And certainly not for the university pretending that after getting rid of that team they'd still be able to earn the same amount of money.

Yes, it did happen before. From 1929 to 1933 the USSR transformed from an agrarian country to worlds second industrial power by having the equipment of thousands of factories (bought on the cheap, after the Great Depression started) transported from US and West Europe. Similarly the Nazi Germany from 1934 to 1938 became 3rd in industrial output.

China's historic grandeur is overstated. Consider this eye opening quite from Adam Smith's The Wealth of Nations 1776:

The poverty of the lower ranks of people in China far surpasses that of the most beggarly nations in Europe. In the neighbourhood of Canton many hundred, it is commonly said, many thousand families have no habitation on the land, but live constantly in little fishing boats upon the rivers and canals. The subsistence which they find there is so scanty that they are eager to fish up the nastiest garbage thrown overboard from any European ship. Any carrion, the carcase of a dead dog or cat, for example, though half putrid and stinking, is as welcome to them as the most wholesome food to the people of other countries. Marriage is encouraged in China, not by the profitableness of children, but by the liberty of destroying them. In all great towns several are every night exposed in the street, or drowned like puppies in the water. The performance of this horrid office is even said to be the avowed business by which some people earn their subsistence.

When Smith wrote, China had already fallen behind. Unlike the United States, they have been there for 3000 years, though. I recommend "Why the West rules - for now" by Ian Morris if you want to get an idea of this.

An important and tragic reminder of the importance of contraception as a technology there.

The argument is exactly that when China shifts to a nation of consumers it will not grow at 7.5% but at maybe 4%. Currently it is not a nation of producers it is a nation of infrastructure builders, that is what is driving the growth, not production, the largest infrastructure investment (50% of GDP per year) ever seen. Consumer economies just dont grow that first continuously.