Der Trihs wasn’t talking about slavery but “company towns”.
Beyond that, even if he was “12.5%” is hardly “The great majority”.
Also based on Der’s rather odd reactions to the phrase “white skin privilege” if slavery was brought up he’d probably start spouting off like Fitzhugh and start screaming about how much worse off the white working-class was and ignore what the people of the time felt.
I think puddleglum was using a list that took purchasing power parity (PPP) into account. I don’t have a strong preference for one method over the other; it’s not as if any country’s ranking in one list is that far from its ranking in the other list. The more important point is that countries with high GDP per capita by either measure tend to be those with economic freedom. If we look at the Index of Economic Freedom, we see at the top many of the same nations at the top of the GDP lists: Australia, New Zealand, Switzerland, Canada, the USA, Denmark, Luxembourg, Singapore, …
There are a few nations with high GDP per capita and not so high economic freedom. Not surprisingly, Arab petro-states like Kuwait meet that description. But for the most part the relationship between wealth and economic freedom looks quite clear.
Smith’s big idea was that the economy was not a zero-sum game. (Although he lived long before game theory had come up with the term.)
The old economic system was mercantilism which essentially was based on the idea that there was a finite amount of wealth in existence. That meant that the only way to become wealthier was to take wealth from somebody else and, as a result, make them poorer. Economics was pure competition with everyone fighting for the biggest share of the pie.
Smith had the brilliant idea that economics didn’t really work like that. Wealth was no finite; new wealth could be created. If two people worked together to create wealth, they could both end up richer than they had begun with nobody becoming poorer. While people focus on competition, the real change in capitalism is that it introduced the possibility of productive cooperation.
Exactly-the money given to West Germany was nothing, compared to the open market that the USA extended to Germany. With the Mark pegged at 5 to the US$, the Germans sold everything from cars to cuckoo clocks-a VW Beetle sold for less than 1/3 the price of a comparable US made model. The access to the US market allowed Germany to grow at up to 8%/year. This ended when Nixon abandoned fixed exchange rates, but that was the biggest factor in German recovery.
That site ranks France as a 64 and moderately free. They also put Italy, Israel, Spain and Belgium in that category. I don’t know what kinds of policies lead to economic growth, however I do not think that pure liberal economics is the way to go. It seems a lot of nations are succeeding with state involvement and a strong social safety net. China has heavy state involvement, and they are building a social safety net and their economy has helped the world survive the recession a little better.
Almost all wealthy countries that aren’t oil rich are either western nations or east asian nations. I think the latin american countries are catching up and may be wealthy (per capita income of 20k or higher) by mid century though. Mexico, Brazil, Argentina, Chile, etc. are all at about 10k right now.
I’d argue - based on stuff I read re: Political Economy - it is quality of property rights.
Knowing what I know about Soviet Union and Eastern European countries I’d present those countries - including some cultural heritage in terms of Slavic vs. Anglo-Saxon philosophy - that indeed, property rights is one of the key factors of economic growth.
I’m always amazed - and sometimes frustrated - how Anglo-Saxon societies deal with failures of political parties and their leaders as opposed to other parts of the World. The stability and relative independence of economy from changes in government seems to me as extension of the idea that property rights principles and clarity play important factor in individual and thus wealth of nation.
Let’s go to the quarry and throw stuff down there!
Your assertion is ludicrous.
Indeed. At the end of WWII, the US accounted for ~50% of the global GDP. Imagine that-- 50%. We were truly the 'Kings of the World".
From The Problem of China, by Bertrand Russell (1922):
Your question is a good one; your answer is rather pat, yes?
Roughly speaking, membership in the OECD is a good indicator of a well functioning economy. I’d include the US in that list, though I’ll note that their life expectancy IIRC is smack in the middle of that group. Not at the top. GDP per capita is high, but some of the other quality of life indicators aren’t stellar by rich world standards.
Roughly speaking, I’d say that the fundamentals of economic development include a market based economy (not the USSR or North Korea), a redistributive welfare state (see this week’s Economist magazine sub req), investment in education (note how well the Asian tigers have done in this regard). Primary education has particularly large bang for the buck.
At the moment China is growing very rapidly. Indeed this is the first recession where emerging markets are providing most of the growth out of the downturn (no cite, damn I can’t remember). What’s happening is that there were a number of policy failures in the developing world from say 1950-1985, which has led to a new generation of pragmatic leaders determined to set aside the slogans and focus on proven policies.
I think the discussion shows that there were a very wide variety of factors involved. Natural resources help: IIRC, U.S. was once the world leader (or nearly so) in coal, iron ore and petroleum, has a huge amount of excellent farmland, etc. Political trends and economic trends (homesteading laws for just one example) helped much, though as Der Trihs implies this can be a two-edged sword: The “workaholic” spirit that increases GDP may reduce contentment.
Anyway, my contribution to the thread will be a silly factoid half-remembered from 45 years ago:
I dimly recall a teacher suggesting that an important difference between U.S.A. and Russia is that the isotherm lines of the U.S. are roughly perpendicular to its isohyet (rainfall) lines, while in Russia the angles between these line sets are much more acute! This means that crop performance moves only slightly geographically year-to-year in the U.S., but moves much further in Russia, making crop failures more common and farmers’ guesswork much harder.
No cite – the argument seemed so odd I’ve remembered it for decades!
No, this is specifically about why Russia is poor and America is not when they are otherwise similar in terms of size and resources. If you want to compare why Canada and Russia are different, or why Mexico is poor and …say, Australia isn’t, that’d be a whole different debate, with different factors highlighted for each. Comparing only USA and Russia, though, I think lack of warmwater ports caused by latitudinal differences would be a huge factor.
Well, the assertion that the vast majority of Americans lived in company towns is pretty obviously false. But at the same time, to say that Americans were uniquely economic free while ignoring that, until 1860, an 8th of them were explicitly NOT economically free (not to mention the other economic restrictions caused by slavery to non-slaves) seems unusual.
Also, Americans weren’t uniquely mechanized, contrary to earlier statements in the thread. The first mechanical thresher was a Scottish invention, and European farmers adopted mechanical improvements in agriculture just like American ones.
The OP gets more right than people would want to admit, and I knew he’d be getting piled on before I read the first response.
In general the regions of earliest prosperity coincide with places where a combination of factors allowed for successful large scale agriculture. This was basically the Fertile Crescent, China, and later parts of Central America. Those three hot beds relatively quickly spread the practices that lead to prosperity and basically civilization to neighboring areas. Over time that created a massive advantage that indigenous peoples of Oceania, Africa, most of North America etc never surpassed.
The prosperous peoples of the Americas unfortunately never developed immunity to any disease more common in Eurasia and this basically destroyed their society after first contact. The Chinese development stagnated for a complex combination of political and economic reasons. The Fertile Crescent and its immediate neighboring areas were much more prosperous than most of Western Europe (when the Roman Empire fell the Western half aside from Italia had always been worse off than the more established peoples of the Eastern Roman Empire and this is precisely why when Muslim conquerors took most of the Eastern Roman Empire their societies became so advanced–those cities and people had always been highly advanced relative to their neighbors) but eventually this region stagnated in a fashion similar to China. At that point you had one of the genesis areas of prosperity/civilization wiped out by colonialism, and the other two were stagnated. Then, Western/Central Europe, which was not a place where civilization began but where it spread over time had several things happen that uniquely positioned it to surpass everywhere else on the planet.
Then the States in Europe started founding colonies, and their colonies immediately carried with them all of the advantages of the mother country in many ways. Almost unique amongst such Colonies, the Thirteen Colonies which became America were supremely well positioned in terms of total population, political ideology, economic system, and geography to take all of the built in advantages that were theirs from 2,000+ years of development and maximize reaping the rewards of the industrial revolution and agricultural revolutions.
It is during the 19th century when the framework for America becoming the wealthiest country was built and in the 20th century when it happened (it would not have happened in the 20th if not for what happened in the 19th), and if you compare the U.S. to other countries during that time the advantages are obvious. One major thing is aside from the Civil War the 19th century was very free of strife for the United States. The Napoleonic Wars completely devastated most of the German States and France and those were the hot beds of economic activity in continental Europe at that time. Massive amounts of inherited power and privilege made it more difficult for economic ingenuity to be rewarded in Europe than in the United States. Andrew Carnegie for example would have no place in history today if he had never left Scotland because his rags to riches story truly was only possible in the United States in the 19th century. The U.S. has the aforementioned large natural resource advantages over European countries for sure.
Despite its advantages, America had disadvantages too. For one, Europe started out with a lot more wealth. Most of the wealth of Europe didn’t emigrate to the Americas because it was concentrated in the hands of elites who had no motivation to leave, it was mostly people of ordinary or limited means who felt there were justifiable rewards to immigrating across the Atlantic. In large part that is why without all of those structural advantages the economy of the United States didn’t really come of age compared to Europe til about 1900. WWI essentially wiped out any real competitor to the United States in terms of wealth, power, etc because of how destructive it was for its participants–with the exception of the British Empire which was finished off in that regard by WWII.
The early history of our economy is definitely part of why we became prosperous, we did not have wealth locked in the hands of hereditary elites, which certainly helped. We had many more opportunities for entrepreneurs to make a name for themselves. But we also benefited from our geography, natural resources, and protection from the worst strife of the 19th and later early 20th century.
It’s comparable to why Britain was the greatest power of Europe by 1815–it had all the advantages of Europe’s other powers but was also insulated by a thin channel of water from most of its biggest problems and this enabled her to manipulate Continental affairs so that no single Continental hegemon could arise to Challenge Britain and allowed Britain to colonize and exploit a huge chunk of the world. We didn’t have as much accumulated wealth in 1776 as Britain, but we had a lot more opportunity to create more and a much better protection from Europe’s strife and then we had less problems with hereditary wealth and political power.
Russia is poor to even talk about, their story is markedly different from Europe such that while parts of Russia is geographically Europe it’s questionable to even think of their history as European history. Russia was marauded by powerful nomadic peoples for centuries while Western Europe had established feudal states. Russia had an extreme concentration of power and wealth on a far different scale than Western Europe and a serf system that was much closer to chattel slavery than most Europen serfdom etc. Russia had a lot of things that kept if from ever being the world’s most prosperous country before you even talk about its lack of access to warm water ports and its climate.
Could you unpack that last paragraph a little for me? It’s an interesting perspective but I’m not quite sure how and why it amazes and frustrates you.
Well, it may be a bit personal and somewhat subjective but I will try to extrapolate carefully. The whole idea is still work in progress… still not clear in my mind. Let alone being able to express it in English - lol
When I look at my family history (both parents’ sides) and a bit of a wider community I grew up in, I can notice a trend of what I’d call “starting from the scratch” amidst historical determinants of wars, revolutions, external influences, inner turmoil and what-not summarily referred to as “factors of instability”. Over a period of more than 100 years no generation has inherited property in its full volume and most often it was completely wiped out. At one point – and that seems to be a single most transforming factor – all Slavic countries converted all of private property into socialist (state property) property and then when that did not work out, they decided to undo all that with even worse consequences for the society at large by single-bullet privatizing process.
The degree to which these societies delved into self-destructive behavior illustrates the example of media and government sponsored witch-hunt in former Yugoslavia in early 1980’s called “Origin of (fill-in the name)’s wealth” – TV shows, radio, newspaper articles, rumors, innuendos targeting those who were well-off because, apparently, in socialism you were not supposed to be rich. It was insane but at the time it was part of culture – rarely, if ever, anyone questioned it. Now, it looks as if the whole point was destruction of any wealth – regardless how earned: criminally or hard work. After process of “democratization” and implementing capitalist “market practices” suddenly you have these unbelievably wealthy people (just look at some of the Russian “magnates” who collected billions in only 10-15 years but goes as well in other Slavic countries). Which means, it all went into another extreme – now, the wealth is concentrated in a very small set of hands.
It seems Slavic countries cannot do anything right regardless of socialism or capitalism. None of the Slavic countries would pass a test – Russia, Ukraine, Belorussia, Poland, Czech, Slovakia, Bulgaria and, all southern Slavic countries of ex-Yugoslavia are hotbeds of ignorance, bullshit, mistrust, violence, stupidity but most of all – lack of continuous stability of government and lack of a continuous hold of property.
And then I started studying Anglo-Saxon history – US and Canada, specifically – only to learn that these countries started dealing with their crises 180 degrees opposite of how it was done in Slavic countries. Just look at totally unprovoked war with Iraq and 2008 Financial Crisis. Those are prime example of dealing with crisis in a way that does not jeopardize the way government operates and the way property is being held. You can say anything but do very little to change any of the two.
At a high-level, of some sort of historical perspective, that is simply amazing but at the level of actual deeds it can be frustrating because, as an individual, you look at this and read about how there is no chance of prosecuting Bush for war crimes or getting any of bankers into jail. It won’t happen and I think I know why. And, “worst” of all, I think that’s the right way.
Thanks very much, newcomer. I never thought of it like that before, that we sort of tiptoe around wealth, forgive it some of its sins and make sure its existence is rarely threatened. We’d rather see crappy people get their hands on some of it than not have it available at all.
Quote:
Despite its advantages, America had disadvantages too. For one, Europe started out with a lot more wealth. Most of the wealth of Europe didn’t emigrate to the Americas because it was concentrated in the hands of elites who had no motivation to leave, it was mostly people of ordinary or limited means who felt there were justifiable rewards to immigrating across the Atlantic. In large part that is why without all of those structural advantages the economy of the United States didn’t really come of age compared to Europe til about 1900. WWI essentially wiped out any real competitor to the United States in terms of wealth, power, etc because of how destructive it was for its participants–with the exception of the British Empire which was finished off in that regard by WWII.
The rapid growth of the USA economy after 1865 was largely due to foreign (British, mostly) capital entering the US. Dutch and French investors played a role as well. The trans-continental railroad was largely financed by British capital, and many other projects as well. The USA did not become a next exporter of capital untill afetr WWI
I’m reminded of the old Russian joke:
Two peasants had farms next to each other. One owned a horse while the other did not. The peasant who owned the horse could plow three times as much land as the neighbor who had to use a hoe, and so was well off while the neighbor was poor and hungry. Then one night while the poor peasant was praying, an angel appeared to him and said “God has heard your prayers, and because you have had such a hard life, you may have one wish”. To which the poor peasant pointed towards the neighboring farm and said “Kill his horse!”.
Careful. There is something known as the resource curse: countries endowed with large petroleum deposits for example typically don’t leverage them well. In fact, by appreciating the currency, oil exports can choke off other export sectors: this effect is known as the Dutch Disease, which may or may not afflicted the Netherlands when it developed its North Sea oil.
IIRC, Norway is an example of a country that’s allegedly been able to evade the resource curse. It’s not inevitable. But it’s a very real risk.
I know you took the example of 19th century US, which had a broad array of resources not incidentally timber. Again, I’m not claiming inevitability. I’m suggesting though that for insight into 19th century US growth, look to our protection of clearly delineated property rights and universal education.