Globalisation

vimothy · Jun 26, 2007

Since there seemed to be so much opposition to globalisation in the "Occupying the moral high ground" thread, I thought I would post something giving the liberal, pro-capitalist view of globalisation. This is from George Reisman's classic study, Globalization: the Long-Run Big Picture.

Globalization, in conjunction with its essential prerequisite of respect for private property rights, and thus the existence of substantial economic freedom in the various individual countries, has the potential to raise the productivity of labor and living standards all across the world to the level of the most advanced countries. In addition, it has the potential to bring about the radical improvement in productivity and living standards in what are today the most advanced countries, and to provide the strongest possible foundation for unprecedented further economic advance everywhere.

These overwhelmingly beneficial results are often hidden from view by the fact that at the same time globalization implies a substantial decline in the relative or even absolute nominal GDPs of today's advanced countries, the experience of which engenders opposition to the process. What is not seen is that to whatever extent globalization might reduce absolute nominal GDP in today's advanced countries, it reduces prices many times more, with the result that it correspondingly increases their real GDP, and that to whatever extent it reduces merely their relative nominal GDP, it again increases their real GDP many times more.

This article shows that by incorporating billions of additional people into the global division of labor, and correspondingly increasing the scale on which all branches of production and economic activity are carried on, globalization makes possible the unprecedented achievement of economies of scale—the maximum consistent with the size of the world's population. First and foremost among these will be the very substantial increase in the number of highly intelligent, highly motivated individuals working in all of the branches of science, technology, and business. This will greatly accelerate the rate of scientific and technological progress and business innovation. The achievement of all other economies of scale will also serve to increase what it is possible to produce with any given quantity of capital goods and labor. Out of this larger gross product comes a correspondingly larger supply of capital goods, which makes possible a further increase in production, resulting in a still larger supply of capital goods, in a process that can be repeated indefinitely so long as scientific and technological progress and business innovation continue and an adequate degree of saving and provision for the future is maintained. The article shows that from the very beginning, the process of globalization serves to promote capital accumulation simply by dramatically increasing production in the countries in which foreign capital is invested, out of which increase in production comes an additional supply of capital goods.

* * * * * *

Output per capita in the advanced, industrial economies is currently 20 times as great as it is in the rest of the world. This is because if 1 billion people produce .8 of the world's output, while 5 billion people produce only .2 of the world's output, those 1 billion produce 4 times as much as the 5 billion. And if the 1 billion people of the First World produce 4 times as much as the 5 billion people of the rest of the world, they produce 20 times as much as do just 1 billion people in the rest of the world. In the rest of the world, the output of 1 billion people is a mere .04 of the output of the world; it takes 5 billion people in the rest of the world to produce its .2 of the world's output. The ratio of the .8 of the world's output produced by the 1 billion people of the First World to the .04 of output produced by 1 billion people in the rest of the world is 20:1.

This radical difference in per capita productivity is the measure of the improvement needed in the rest of the world to achieve per capita parity with the First World and the standard of living of the First World.

* * * * * *

What is to be feared in connection with globalization is not that it will occur but that it will not occur, that the process of its achievement will be aborted or, indeed, thrown into reverse. Progress toward globalization can be aborted by the outbreak of war, including large-scale global terrorism. In such conditions, outside sources of supply can no longer be relied upon, and greater economic self-sufficiency becomes necessary—which, of course, constitutes movement in the opposite direction of globalization. It can also be stopped by the failure of much or most of the world to adopt and then maintain the pro-free-market political-economic policies necessary to its achievement, including such failure in our own country.

Read the whole thing (it's worth it) here: http://www.mises.org/story/2361

craner · Jun 27, 2007

That just ripped 32 pages out my printer Vimothy. It'd better be worth it!

vimothy · Jun 27, 2007

oliver craner said:
That just ripped 32 pages out my printer Vimothy. It'd better be worth it!

Check back in twenty years!

EDIT: Actually, according to Reisman, you should check back in 2104

dHarry · Jun 28, 2007

" Out of this larger gross product comes a correspondingly larger supply of capital goods, which makes possible a further increase in production, resulting in a still larger supply of capital goods, in a process that can be repeated indefinitely so long as scientific and technological progress and business innovation continue and an adequate degree of saving and provision for the future is maintained. "

This is an argument for globalisation? It's absolutely terrifying - the entire globe enslaved, sorry, progressing for ever and ever, amen, producing more and more "goods" (if ever a concept needed rescuing from its etymology...) in an infinite feedback loop... the future never looked so bleak.

vimothy · Jun 28, 2007

dHarry said:
" Out of this larger gross product comes a correspondingly larger supply of capital goods, which makes possible a further increase in production, resulting in a still larger supply of capital goods, in a process that can be repeated indefinitely so long as scientific and technological progress and business innovation continue and an adequate degree of saving and provision for the future is maintained. "

This is an argument for globalisation? It's absolutely terrifying - the entire globe enslaved, sorry, progressing for ever and ever, amen, producing more and more "goods" (if ever a concept needed rescuing from its etymology...) in an infinite feedback loop... the future never looked so bleak.

It depends on what you want doesn't it, dHarry? Globalisation, if properly realised, will irradicate poverty and enable proper and proportionate use of the planet's resources and division of labour. Don't think of it in marxo-metaphysical terms, just think of it in terms the number of people who can be rescued from death from entirely preventable diseases and famines. The promise of endless improvement (unlikely given how destructive humnity is) is meant to underline the lack of an upper bound, which is to say, we're not going to reach the limits of success and then collapse back into barbarianism (much as some might want).

Really, how can you be against the annihilation of global poverty?

ifp · Jun 28, 2007

dHarry said:
" Out of this larger gross product comes a correspondingly larger supply of capital goods, which makes possible a further increase in production, resulting in a still larger supply of capital goods, in a process that can be repeated indefinitely so long as scientific and technological progress and business innovation continue and an adequate degree of saving and provision for the future is maintained. "

this rests on the assumption that materials available to us are infinite. in fact, key raw material such as oil, gold, etc. needed to make most "modern" things - plastics, fuel, computer chips - are clearly finite. how does capitalism keep increasing productoin after it has used up all the raw materials?

Gavin · Jun 28, 2007

This formulation also pretends there is no class system and that increases in productivity are spread evenly through social formations, a gross falsehood and blatant ideological ploy. Globalization merely entails a greater concentration of wealth in the core countries as MNCs, further enabled through the World-Bank/IMF cabal, strip the periphery of resources by bribing tiny segments of the native ruling elite.

Guybrush · Jun 28, 2007

Out of this larger gross product comes a correspondingly larger supply of capital goods, which makes possible a further increase in production, resulting in a still larger supply of capital goods, in a process that can be repeated indefinitely so long as scientific and technological progress and business innovation continue and an adequate degree of saving and provision for the future is maintained.

I love how this totally sounds like it’s straight outta some five-year plan circa the Great Purge or something.

vimothy · Jun 29, 2007

Gavin said:
This formulation also pretends there is no class system and that increases in productivity are spread evenly through social formations, a gross falsehood and blatant ideological ploy. Globalization merely entails a greater concentration of wealth in the core countries as MNCs, further enabled through the World-Bank/IMF cabal, strip the periphery of resources by bribing tiny segments of the native ruling elite.

That being the case, how do you explain China?

The World Bank estimates that more than 60% of the population was living under its $1 per day (PPP) poverty line at the beginning of economic reform. That poverty headcount ratio had declined to 10% by 2004, indicating that about 500 million people have been lifted out of poverty in a generation.

- http://www-wds.worldbank.org/extern...406_20070613095018/Rendered/INDEX/wps4253.txt

swears · Jun 29, 2007

vim: Yeah, but look at the state of Russia after the IMF's reforms. And China is still basically a socialist country.

vimothy · Jun 29, 2007

swears said:
vim: Yeah, but look at the state of Russia after the IMF's reforms. And China is still basically a socialist country.

But in China the is wealth (and the jobs) is created where it has liberalised (i.e. in the Special Economic Zones) and abandoned socialist practices. And until DXP's reforms its economy was going nowhere. Think that China has definitely benefited from globalisation (as has India). Otherwise, why does China's rise correspond exactly with its reform?

As for Russia - badly managed reform does not mean that reform is always bad. It means reform has to be managed better.

vimothy · Jul 10, 2007

A Brief History of Economic Time, by Steven Landsburg:

Modern humans first emerged about 100,000 years ago. For the next 99,800 years or so, nothing happened. Well, not quite nothing. There were wars, political intrigue, the invention of agriculture -- but none of that stuff had much effect on the quality of people's lives. Almost everyone lived on the modern equivalent of $400 to $600 a year, just above the subsistence level. True, there were always tiny aristocracies who lived far better, but numerically they were quite insignificant.

Then -- just a couple of hundred years ago, maybe 10 generations -- people started getting richer. And richer and richer still. Per capita income, at least in the West, began to grow at the unprecedented rate of about three quarters of a percent per year. A couple of decades later, the same thing was happening around the world.

Then it got even better. By the 20th century, per capita real incomes, that is, incomes adjusted for inflation, were growing at 1.5% per year, on average, and for the past half century they've been growing at about 2.3%. If you're earning a modest middle-class income of $50,000 a year, and if you expect your children, 25 years from now, to occupy that same modest rung on the economic ladder, then with a 2.3% growth rate, they'll be earning the inflation-adjusted equivalent of $89,000 a year. Their children, another 25 years down the line, will earn $158,000 a year.

Against a backdrop like that, the temporary ups and downs of the business cycle seem fantastically minor. In the 1930s, we had a Great Depression, when income levels fell back to where they had been 20 years earlier. For a few years, people had to live the way their parents had always lived, and they found it almost intolerable. The underlying expectation -- that the present is supposed to be better than the past -- is a new phenomenon in history. No 18th-century politician would have asked "Are you better off than you were four years ago?" because it never would have occurred to anyone that they ought to be better off than they were four years ago.

Rising income is only part of the story. One hundred years ago the average American workweek was over 60 hours; today it's under 35. One hundred years ago 6% of manufacturing workers took vacations; today it's over 90%. One hundred years ago the average housekeeper spent 12 hours a day on laundry, cooking, cleaning and sewing; today it's about three hours.

As far as the quality of the goods we buy, try picking up an electronics catalogue from, oh, say, 2001 and ask yourself whether there's anything there you'd want to buy. That was the year my friend Ben spent $600 for a 1.3-megapixel digital camera that weighed a pound and a half. What about services, such as health care? Would you rather purchase today's health care at today's prices or the health care of, say, 1970 at 1970 prices? I don't know any informed person who would choose 1970, which means that despite all the hype about costs, health care now is a better bargain than it's ever been before.

The moral is that increases in measured income -- even the phenomenal increases of the past two centuries -- grossly understate the real improvements in our economic condition. The average middle-class American might have a smaller measured income than the European monarchs of the Middle Ages, but I suspect that Tudor King Henry VIII would have traded half his kingdom for modern plumbing, a lifetime supply of antibiotics and access to the Internet.

[BTW, The Wall Street Journal Online is free today]

Gavin · Jul 10, 2007

Some rather large caveats in that piece.

Then -- just a couple of hundred years ago, maybe 10 generations -- people started getting richer.

Slavery and colonialism certainly bring in the cash, don't they?

Per capita income, at least in the West, began to grow at the unprecedented rate of about three quarters of a percent per year.

How about the "non-West," i.e. most of the world?

Also, per capita income doesn't take into account wealth disparities at all. This guy is basically picking a group (the West, although he quickly slides into the U.S.) in which the average income suits his purposes. And I'm sure I don't need to remind you, Vim, that averages can go up even as wealth disparity (that old class blind spot that resurfaces in all these articles you post) increases. Such is to be expected from the WSJ.

The underlying expectation -- that the present is supposed to be better than the past -- is a new phenomenon in history.

And so incredibly complex and multifaceted that boiling it down to economic growth is incredibly silly, although we shouldn't discount the role of capital (forever squeezing surplus value out of time) in producing modernity.

Rising income is only part of the story. One hundred years ago the average American workweek was over 60 hours;

Hmm, how did that happen? Perhaps through decades of union antagonism? Or maybe it was just the inevitable march of progress.

today it's under 35.

Because people denied full employment must subsist on part time jobs, contract work, and crime. This is not a statistic to brag about; indeed, typically the U.S. media is incredibly hostile to the French 35-hour mandated workweek.

As far as the quality of the goods we buy, try picking up an electronics catalogue from, oh, say, 2001 and ask yourself whether there's anything there you'd want to buy. That was the year my friend Ben spent $600 for a 1.3-megapixel digital camera that weighed a pound and a half. What about services, such as health care? Would you rather purchase today's health care at today's prices or the health care of, say, 1970 at 1970 prices? I don't know any informed person who would choose 1970, which means that despite all the hype about costs, health care now is a better bargain than it's ever been before.

This paragraph is total tripe. What on earth is "the health care of 1970"? And what is the point of these absurd hypotheticals? Millions of people (in the West) can't afford today's health care, "better bargain" or not.

I suspect that Tudor King Henry VIII would have traded half his kingdom for modern plumbing, a lifetime supply of antibiotics and access to the Internet.

All of which is still denied to billions of people around the world! Viva progress!

Gabba Flamenco Crossover · Jul 10, 2007

vimothy said:
Globalisation, if properly realised, will irradicate poverty and enable proper and proportionate use of the planet's resources and division of labour.

The big problem that I see is that free market theory has no way of dealing with the concept of finite resources, and thier terminal effect on supply. To give a commonly used example: China wont ever experience the levels of car ownership seen currently in the USA, because there just isn't enough metal in the earth to make that many cars. This is (almost*) outside the parameters of free market theory - no intensity of demand will ever be strong enough to create that non-existant metal.

Ah, but what about stimulating technological innovation? If the iron runs out, won't we develop cars made from different materials? That's fine, in theory, but actually all the likely contenders (plastics, aluminium, carbon fibre) are dependent on resources that are just as scarce as iron. So, we're really talking about demand strong enough to force the development of a car made from a readily available resource - limestone perhaps, or salt water. At this point, you have to take a step back and say, how enormous would demand have to be to generate a technological leap of that magnitude? Is that feasable in the real world?

Similarly, demand could in theory be high enough for manufacturers to take steel from extra-terrestrial bodies and bring it back to earth, But consider the level of capital investment needed to make that feasible, not to mention the time, and you ask yourself again: would it ever really happen? The USA, at the height of it's cold war affluence, spent one eighth of it's federal budget on the Apollo space programme - that was 12.5c of every tax dollar, from every US taxpayer, to send some guys to the moon for a few hours. The cost of technological innovation in some fields is far too great to be overcome by any demand pressure conceiveable in the real world.

Back to the almost* - things like the art market shows how the free market deals with finite commodities. The result is usually extreme price instability. And paintings are luxury items. No nation is going to go to war over being priced out of the Rembrants market. But would they do that if the finite commodity was steel? Or clean water, or oil maybe? Yes, they probably would. Throughout history, humans have commonly used force to acquire resources that they are unwilling or unable to trade for. So my worry about globalisation is that a too rigid application of free market thinking will cause finite resources to be treated as if they were infinite, causing political instability and ultimately greater human suffering.

vimothy said:
Really, how can you be against the annihilation of global poverty?

You need to put a stop to this kind of horseshit. No one is against the annihilation of world poverty. This is a discussion about method. If you say that the best way to get from London to Exeter is via the A303 and I disagree with you, I'm not throwing doubt on the very existance of the city of Exeter, am I? Don't be so absurd, it undermines your arguments.

Personally, I love all that American Dream shit. It would be great to live in a world of unlimited resources, where each man could trade merrily away, controlling his own destiny, annihilating poverty as he goes along, and lollipops grew on trees and the cows shat candyfloss. But this is the real world. Resources are finite. Rich nations use thier power to try to insulate themselves from the negative effects of globalisation - see the BUsh administration's protectionist policies and current sabre rattling over CHinese imports.. And individuals, groups and nations will only maintain the social contract if they feel thier needs are being met, otherwise they will fall back on force. We need to plan a future for the world we've got, not the ones in our heads.

vimothy · Jul 11, 2007

Gabba Flamenco Crossover said:
You need to put a stop to this kind of horseshit. No one is against the annihilation of world poverty. This is a discussion about method. If you say that the best way to get from London to Exeter is via the A303 and I disagree with you, I'm not throwing doubt on the very existance of the city of Exeter, am I? Don't be so absurd, it undermines your arguments.

Only have time to address this, for now. What I said was not horseshit. dHarry was bemoaning the process of continuous capital creation and continuously increasing production, the upshot of which is very much the end of absolute poverty (though not relative poverty), as far as I can tell because he doesn't like the idea that capitalism is sustainable.

Or, to use your metaphor, it's like saying you find the idea of being able to get from London to Exeter in one car terrifying.

Tactics · Jul 11, 2007

great paragraph

Gavin said:
This formulation also pretends there is no class system and that increases in productivity are spread evenly through social formations, a gross falsehood and blatant ideological ploy. Globalization merely entails a greater concentration of wealth in the core countries as MNCs, further enabled through the World-Bank/IMF cabal, strip the periphery of resources by bribing tiny segments of the native ruling elite.

this is a f****** great thread - please continue...

*sits back with popcorn*

*edit* actually hold on...what is an MNC?

bruno · Jul 11, 2007

a multinational corporation

dHarry · Jul 11, 2007

vimothy said:
Gabba Flamenco Crossover said:

You need to put a stop to this kind of horseshit. No one is against the annihilation of world poverty. This is a discussion about method. If you say that the best way to get from London to Exeter is via the A303 and I disagree with you, I'm not throwing doubt on the very existance of the city of Exeter, am I? Don't be so absurd, it undermines your arguments.

Click to expand...

Only have time to address this, for now. What I said was not horseshit. dHarry was bemoaning the process of continuous capital creation and continuously increasing production, the upshot of which is very much the end of absolute poverty (though not relative poverty), as far as I can tell because he doesn't like the idea that capitalism is sustainable.

Or, to use your metaphor, it's like saying you find the idea of being able to get from London to Exeter in one car terrifying.

Vimothy, you know full well that I wasn't bemoaning the imminent end of world poverty, or that driving to Exeter in one car is terrifying. (On the other hand I've never been to Exeter - is it particularly scary? And who else is in the car?)

I said that a future of enslavement to the unceasing, untrammelled, infinite capitalist production of "goods" of dubious quality or benefit to the world is a nightmarish prospect. And as has been pointed out, the history of our glorious forward march into progress has not been due to the benign force of the free market by any means.

Gabba Flamenco Crossover · Jul 12, 2007

vimothy said:
What I said was not horseshit.

I'm not getting into a slanging match about your choice of rhetorical device, because that's what this is - you don't really believe that anyone here approves of poverty. Just try to keep it a bit fresher in future please. The means=ends stuff is tired.

Instead I'm going to have a rip at that Landsburg quote.

Steven Landsburg said:
Modern humans first emerged about 100,000 years ago. For the next 99,800 years or so, nothing happened. Well, not quite nothing. There were wars, political intrigue, the invention of agriculture -- but none of that stuff had much effect on the quality of people's lives. Almost everyone lived on the modern equivalent of $400 to $600 a year, just above the subsistence level. True, there were always tiny aristocracies who lived far better, but numerically they were quite insignificant.

Then -- just a couple of hundred years ago, maybe 10 generations -- people started getting richer. And richer and richer still. Per capita income, at least in the West, began to grow at the unprecedented rate of about three quarters of a percent per year. A couple of decades later, the same thing was happening around the world.

In the narrow terms of per capita income, this is true. Landsburg doesn't say why, in his opinion, this phenomena occured. Perhaps he doesn't know.

It certainly wasn't down to trade, which is as old as human civilization. Peoples with the will and the means to trade have always been richer than their contemporaries who didn't - and that's across the board, not just at the level of the ruling elite. Rather, the explosion in mathematical wealth that has occured over the last two centuries was caused by the interaction of a complex network of human innovations, both material and intellectual, which occured in the preceeding 3 centuries. They created the conditions from which the industrial revolution emerged, and that re-ordered western society to produce the intellectual framework and the physical products that underpin the 20th century's explosion in wealth.

The lesson of this (missed by practically all free market evangelists) is that knowledge and technological innovation don't respond to market demand. At all. Not even the slightest bit. The market can repackage existing technology into a consumer-friendly form, but to claim that it can pluck brand new technological innovation out of thin air (as GWB does in his enviromental policy) is simple-minded utopianism. The market demand for the most significant products of the 20th century has always been there. If antibiotics had been invented in 2500BC, they wouldn't have sat on the shelf for want of demand. All the theoretical framework for semiconductors had been completed by the start of the 19th century, but the market still had to twiddle it's thumbs for another 170 years before a viable physical device emerged.

Oh, and I would humbly suggest that the advent of agriculture, the point at which humanity took control of it's food supply and in doing so left the animal kingdom behind forever, was a sight more important than anything that's happened in the last few centuries.

Steven Landsburg said:
Then it got even better. By the 20th century, per capita real incomes, that is, incomes adjusted for inflation, were growing at 1.5% per year, on average, and for the past half century they've been growing at about 2.3%. If you're earning a modest middle-class income of $50,000 a year, and if you expect your children, 25 years from now, to occupy that same modest rung on the economic ladder, then with a 2.3% growth rate, they'll be earning the inflation-adjusted equivalent of $89,000 a year. Their children, another 25 years down the line, will earn $158,000 a year.

This passage makes sense on it's own terms, but it's divorced from any kind of reality. Pro-free market writers are very keen on measuring absolute poverty - but the wealth of an individual has to be assessed relative to the resources that are available within the market during that individual's existance. To say that a medieval milkwench couldn't afford to do her weekly shop at Waitrose - really, what the fuck does that tell you about anything?

There are time-independent measures of poverty which I'll come to below, but what people are concerned with is relative poverty within thier own cohort. The pie is on the table in the here and now - the issue is, who gets the biggest piece? Absolute poverty has reduced over the last 200 years, so why is there more instability around resourse allocation than at any time in human history? Because relative wealth and poverty are so much more extreme. The left at least understand that, though they miss the mark elsewhere. But the libertarian right are so keen to avoid the topic of wealth distribution that they back themselves into writing jibberish like the passage quoted above.

Steven Landsburg said:
Rising income is only part of the story. One hundred years ago the average American workweek was over 60 hours; today it's under 35. One hundred years ago 6% of manufacturing workers took vacations; today it's over 90%. One hundred years ago the average housekeeper spent 12 hours a day on laundry, cooking, cleaning and sewing; today it's about three hours.

What about services, such as health care? Would you rather purchase today's health care at today's prices or the health care of, say, 1970 at 1970 prices? I don't know any informed person who would choose 1970, which means that despite all the hype about costs, health care now is a better bargain than it's ever been before.

The only universal, time-independant measures of wealth are health, food and happiness, and the latter two are arguably subheadings of the first. If you're going to assess the wealth of humanity outside of time, you have to break it right back to the organism's probablity of survival. And on those terms, humanity has got absolutely richer over the period Landsburg is focusing on. Life expectacy is up, infant mortality is down. Starvation affects a lesser proportion of the world's population, as do deadly diseases like Cholera.

But if we're assessing the survival of the organism, we're forced to throw the net wider. What about happiness? Something I hear continuously from doctor friends who have worked in Africa is that while African children are physically less healthy than their counterparts in the developed world, they are in much better shape psychologically - happier, more even in temperement, with better social skills and more aptitude for responsibility at any given age than a similar child in the west. Mental health is the largest public health issue for children in the developed world, and medical people I've spoken to about this say that, while it is somewhat fatuous to compare sad kids in the west with starving ones in Africa, it is a real, significant problem with future implications in many areas, including productivity. They also concede that as a society we are not set up to get a grip on the problem, no matter what goes on in health policy. If you are looking at the survival and health of the organism, against a backdrop like that, then assessing the relative cost of healthcare now compared to 1970 is totally beside the point. Healthcare that doesn't keep you healthy is no kind of bargain at all.

And what about climate change (casting the net to it's widest possible extent)? Almost unanimously agreed in the scientific community to be the biggest threat to humanity's continued survival, but we can't get a handle on exactly what will happen. Our mathematical models, developed during the years of wealth explosion, are insufficiant for the task of comprehending climate change - there are simply too many variables. We're using the wrong intellectual tool. Our ancestors were right, after all - nature is driven by forces whose magnitude and nature are largely obscure to us, and which we are almost powerless to control. The best chance we have of avoiding the worst effects of climate change would be by reverting immediately to a primitive, animist view of nature - you know, believing that cars and kettles were possessed by devils, putting oil executives to the witch trial, etc. That kind of thing.

I'm exaggerating, but the point is that here is a resource, in the form of an intellectual tool for manipulating our enviroment, that we have lost. With respect to that, we are less wealthy, in absolute terms, than our ancestors. And the potential damage to the organism is quantifiable, in terms of productivity loss likely to be caused by climate change.

Steven Landsburg said:
The average middle-class American might have a smaller measured income than the European monarchs of the Middle Ages, but I suspect that Tudor King Henry VIII would have traded half his kingdom for modern plumbing, a lifetime supply of antibiotics and access to the Internet.

And here, in the final flourish, Landsberg makes his most telling error. Because Henry VIII would have rejected that deal out of hand. Like all humanity, what drove him was an obsession with relative power and wealth - relative to his subjects, to his rivals to the throne, to his enemies in the church, and to the other monarchies of Europe. No way would he have surrendered half his kingdom for a few mod cons, unless he was the only one who had them - ie. unless they increased his relative wealth. Anyone who thinks otherwise fundamentally misunderstands the nature of power, and the human desire for power. And as economics is a study of human behavior, an economist who does that has got a serious credibility problem.

vimothy · Jul 12, 2007

Some rather large caveats in that piece.

Do tell.

Slavery and colonialism certainly bring in the cash, don't they?

They bring in some cash, certainly. However, given that brutality is the norm throughout human history, the last couple of hundred years being the exception, neither slavery nor colonialism can explain the relatively recent explosion of wealth. (Can they? We would have been having this conversation five hundred years ago, or more, if they could).

How about the "non-West," i.e. most of the world?

They don't have it quite so good, do they? Is that not what I'm talking about?

Also, per capita income doesn't take into account wealth disparities at all. This guy is basically picking a group (the West, although he quickly slides into the U.S.) in which the average income suits his purposes. And I'm sure I don't need to remind you, Vim, that averages can go up even as wealth disparity (that old class blind spot that resurfaces in all these articles you post) increases. Such is to be expected from the WSJ.

I'm not interested in relative wealth disparity. As Gabba Flamenco Crossover (sort of) points out, it's necessary to power wealth generation. It's also morally right.

And so incredibly complex and multifaceted that boiling it down to economic growth is incredibly silly,

But we're talking about economic growth.

although we shouldn't discount the role of capital (forever squeezing surplus value out of time) in producing modernity.

Ahem. I think there's too much in that statement for me to get into now.

Hmm, how did that happen? Perhaps through decades of union antagonism? Or maybe it was just the inevitable march of progress.

Might it not have been a combination of the two?

Because people denied full employment must subsist on part time jobs, contract work, and crime. This is not a statistic to brag about; indeed, typically the U.S. media is incredibly hostile to the French 35-hour mandated workweek.

Denied! Is a 65 hour working week a right? The reason that people are hostile to the French working philosophy is that it is royally messing their economy up. If you impose standards on employers, it obviously throws up effects that might not (or might) be welcome.

This paragraph is total tripe. What on earth is "the health care of 1970"?

Surely you get this.

And what is the point of these absurd hypotheticals? Millions of people (in the West) can't afford today's health care, "better bargain" or not.

Actually, in the UK, health care is "free". (Though I agree with what I take to be your broader point - that the wefare state is unsupportable).

All of which is still denied to billions of people around the world! Viva progress!

Again, you seem to be under the impression that the advantages we have are floating around in space, there for the taking, and that if only it wasn't for the evil capitalists everyone would have a job and access to the NHS.

And again, what you've said is part of my argument. The developing world deserves better.

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