What ties together their poster boys of South Korea, Taiwan and Singapore? They all had a baseline of education and decent government (for corporations, anyway), which they used to attract foreign investment (read: money flowing into the country) for industries that employed large amounts of people in roles where they could learn useful skills, kick-starting middle class wealth that could then propel the rest of the economy forward.
Most poor countries only have investment in extractive industries (oil, minerals, etc), which employ very few people, and the skills they learn are next to useless for anything else. The next rug up the ladder is places like Cambodia and Bangladesh, where investment goes into labour-intensive but low-tech industries like making clothes, but the government is too corrupt and the people too badly educated for much more. Although Bangladesh, in particular, has been a quiet success story lately, eclipsing India in GDP per capita.
Wait, I didn't realize Ghana was an anarcho communist state!!! I just assumed it was typical stuff like being endlessly marginalized and sold out by the powerful, and their population being treated like oxen by foreign investors, but that also makes sense!
Simple answer; people from rich countries will use flaws in the political structures of certain other countries to install corrupt politicians; these politicians are then going to work for the interests of their rich foreign patrons and against the interests of their own people (for kickbacks/self-enrichment). The corrupt politicians will do things like saddle their people with significant public debts (which will force the people to pay ongoing interest to rich countries; through tax and inflation). In the private sector, they will award big, generous contracts to foreign companies, suppress people's wages to allow foreign corporations to maximize their profits, allow child labor, sweat shops, etc...
That's why, as a regular citizen, it's vitally important to live in a country which has reliable, honest politicians. Otherwise you'll be paying for their corruption through taxes, inflation, wage suppression and loss of opportunities.
I can recommend David Graeber's book "Debt: The First 5000 Years"; it makes a strong case about the immorality of international debt.
There's really no reason to blame this on the foreigners installing corrupt politicians, corruption is far more frequently organic and homegrown. Corrupt people work to further their own goals, if that happens to be using their power to take on e.g. debt on unfavourable terms then so be it, but that's not because they're beholden to foreigners, it's because that is their best route to enriching themselves - they can just steal the borrowed funds!
Keep in mind that corrupt societies are the most likely to have their debts forgiven, i.e. they are not likely to pay back the money borrowed.
I really recommend reading The Dictator's Handbook to learn more about how corruption works.
South Korea and Ghana were at the exact same place 50 years ago. South Korea’s leadership were largely competent, so they’ve industrialized and used trade to become one of the wealthiest countries in the world. Ghana has not had nearly as good leadership and institutions, so they haven’t.
Everyone constantly blames the West for all the problems of the world. If trade was really that deleterious to developing countries, you wouldn’t see the rise of China happening at all
Ha-Joon Chang explains the case of South Korea in details in his book "Kicking away the ladder": Korea developed because it was extremely protectionist, while receiving substantial financial support from the US (because of North Korea, China and USSR).
While Ghana has been under the rule of the IMF the whole time.
IMF policies are arguably extremely toxic; they basically guarantee that countries can't develop by keeping them open to a flood of subsidized products from more powerful countries, killing their ability to develop their agriculture and industry.
China developed similarly by stringently protecting its interior markets. The US did the same in the 19th century. Basically, all countries that successfully developed were staunchly protectionist, then became "free traders" once they become powerful enough to defend themselves on open markets.
Correlation, not causation. The whole point of IMF intervention is to rescue countries that are already in the toilet, and need to consolidate foreign debt.
and you would have a situation like recently in Sri Lanka where they defaulted on loans, and cannot obtain necessary resources like oil to run their economy.
IMF loans are bandaids to stop the bleeding, but the cure depends on the disease. If the country does not cure the disease, the bandaid will not help after a while.
If by country you mean the people who live there, yes.
If you mean whatever oligarchy is nominally in charge, well, the bankers can make sure they’re taken care of as long as the interest payments keep rolling in.
This was the policy of the USA— see Henry Charles Clay, the chief economic advisor of Abraham Lincoln. Started “the American School” of economics. It is all about healthy markets, but still allows for some protectionism. A middle way.
South Korea had a propped up dictatorship that the United States strengthened and funded because they were scared of commies.
Meanwhile Ghana had a dictator which was saddled with US loans who was overthrown. But the country still had to pay the loans back, despite them being will outside of their means.
This is extremely disrespectful of the economic savvy and work ethic of South Korean people.
Korean state had an extremely focused industrial policy to improve the added value created by the country's economic output.
The thing that needs critique here is that free trade would be somehow always beneficial. South Koreans state aggressively supported those industries it wanted to uplift.
Countries do rise up from third world countries to advanced industries. It just does not happen very often - sadly.
Another example of a country that rose from total poverty to industrialized advanced economy is my home country Finland which was in the 18th century dirt poor, started to industrialize, and only after second world war started to get some resemblance of wealth. However, the long history of poverty is still reflected to this day in lack of capital (are there other reasons for lack of capital I'm not sure).
Your implication is that Ghana failed where South Korea succeeded because they didn't work hard enough.
Of course people in South Korea worked hard to get where they are. So did people in Ghana. But in South Korea, the US protected them and funded them. Meanwhile in Ghana, the US stripped them of their wealth.
How well off do you think South Korea would be if the US didn't intervene in the Korean War?
US military intervention and economic uplifting are partly two different things.
I would limit this discussion to "how can a once poor country become an industrialized economy".
Since not all countries do this, the question is incredibly interesting. Perhaps I were too harsh but "US helped them" is not a satisfactory answer.
The fact that north korea is poor and south korea is not, is an interesting part of this puzzle as rare empirical sample of an area with roughly equivalent starting position well into modern history, and it should not be explained away by "because US duh".
I found "Why Nations Fail" an extremely interesting book pondering the puzzle of apparent differences in economic outcomes between countries and warmly suggest it to anyone interested in the topic. It's not really about state failure but about the bigger picture of what makes some states successfull (using the metrics of the author of course).
IMO more accurate to insinuate whether countries succeed or fail to develop is ultimately at the discretion of the (wealthy) hegemon. Especially more so in recent history with the viability of export led growth models and US / western bloc constituting huge % of global GDP, who can choose who to "uplift" via absorbing exports. Which is zero sum process, since demand is still finite, ergo Hegemon + co's policies / cooperation / coercion / indifference picks winners and losers, frequently explicitly via trade agreements / sanctions.
Also The moat and wall around modern tech is so high that industrializing / modernizing / moving up value chain can only be expediently done with active facilitation from other advanced economies. Even primary resource states that on paper should be able to extractive their way to wealth (not equality) still depends on increasingly advanced tech (and now increasingly export restricted) to even get goods to market in first place.
SK / NKR good example. NKR initially more developed than SKR via USSR until US with more resources and consumption seriously invested in SKR while absorbing their industrial policies' surplus. Meanwhile US kept NKR down via sanctions. Even post Korean war, NKR had fairly competent residual industrial prowess. Once country has the industrial institutional memory, it's able to quickly rebuild base to technically flourish but they still need permission to grow unhindered. Most of destroyed european powers postwar got back on feet with push from Marshall plan. Except NKR got pushed down.
"Why Nations Fail" comes from the Jared Diamond school of "My Model Fits My Data So It's Causal". It's a series of just-so stories, which discounts outliers (ex: Singapore, India, China). They take the scientific method (find examples to disprove your hypothesis) and invert it (find examples that match your hypothesis), which does nothing except provide people with the feeling of confidence that they've finally come across the Truth.
Yes, but like Guns, germs and steel it contains data even though the model is flawed, so is an interesting read in any case :)
I think the key point of the book is that unless there is a massive transfer of people from place to place the power of historical institutions can carry over generations and generations.
Is quality of institutions the one truth to explain it all? No, but I find it pretty hard to argue against that it is a relevant factor in historical evolution of polities regarding their quality of administration and general expectations of life outcomes of their populations.
My intent was not to sell the book as "the one truth", sorry.
But we're not talking about long lived, historic institutions; we're talking about South Korea, a republic formed out of the ashes of Japan's colonial project, and Ghana, a new country formed from the rapid retreat of Britain from its colonial empire.
You can talk about the legacy of the colonial institutions in the respective countries, but that has little to do with how hard South Korea worked in the 1950s, and more to do with how Japan and England administered their colonies, and how the transition from colony to state happened.
They're interesting books for sure, I remember enjoying reading them. But they're very selective in the facts they tell and how they tell them, and so they're almost worse than fiction in that respect.
Perhaps I should have not used the term "working hard".
I agree with what you wrote in general.
Why I find other explanations more worthwhile - which you opened up above - than "US helped them" is that is quite critical for countries to be able to advance economically. Based on several examples I don't think it can be explained simply by having a wealthy external sponsor. Hence it would be more important to focus on the things that made this thing happen, in order to understand if something could be replicated.
As an example of potentially replicable factors, for instance land reform seems to be a thing that has been at the roots of economic advancement of several countries. (Finland, South Korea). Of course, it can be screwed up as well (Zimbabwe).
I agree books that try to simplify things are dangerous, but really entertaining when they structure their thesis around solid facts. I don't think anyone has "the final truth" so an author that has at least tried to put forward an explicit thesis is always a worthwhile read - a clearly stated thesis is something the reader is then able to clearly refuse.
As for South Korea, did you look into the impact of US economic aid as well as industrial advisors, and compare it to the economic drag that the US induced via the collection of loan payments on Ghana?
Yes, similar to the assumption that the differences between North and South Korea can't be put down to "lazy people" and "hard working people" being magically seperated on opposite sides of the border.
seems im responding to the wrong user, my apologies.
the person who made the claim was thorougly roasted and edited their comment but you can ctrl + f 'ghana' and see the downstream context.
> Yes, similar to the assumption that the differences between North and South Korea can't be put down to "lazy people" and "hard working people" being magically seperated on opposite sides of the border.
> Your implication is that Ghana failed where South Korea succeeded because they didn't work hard enough.
It's not as simple as that. Building domestic industries takes time and you can never be sure about the outcome (especially if you believe everyone around you is corrupt as was believed in the countries behind the Iron Curtain). The easy money from foreign investors is hard to resist.
They have their debts forgiven on the basis of adopting certain policies (free market reform) that allows corporations from wealthy countries to set up shop and extract raw materials from the counter while avoiding giving back to the country via taxes. The profits get booked in Singapore or the Bahamas, and the stock price keeps going up.
Free market reforms do not forbid taxes on natural resource extraction. The U.S. has plenty of such taxes, and they score very highly on measures of economic freedom.
Of course. But we aren't talking about the States, we're talking about countries that are forced into return as a condition of loan forgiveness.
Some of those conditions involves avoiding any sort of export tariffs and using the declared value of goods to calculate profits (ex: if I spent 20$ extracting copper, and sold it for 20$ to an overseas company which totally isn't related to me, then the taxable profit in your country is 0$).
The article touches on corruption but it dances around the root causes of corruption and the international debt-based monetary system which systematizes it.
Woke politicians and economists are all too happy to talk up the cause of oppressed minorities until you point out the possibility that they are the root cause of the oppression... No, it's not the ancestors from a distant past who are the oppressors, it's happening now.
What I find strange is that economists declare the money/debt problem nonexistent except maybe Keynes who said you will have to either inflate money to erode debts or use something like the Bancor system where excessive balances are sanctioned with fees.
Other economists just assume that all of this debt is 100% voluntary and could be paid back at any time.
> That's why, as a regular citizen, it's vitally important to live in a country which has reliable, honest politicians.
There is no way to ensure reliable and honest politicians. The best you can do is hope most policymakers are at least somewhat honest, and then institute stringent checks and balances to ensure a corrupt politician can't do too much damage. Which is what most developed democracies do, with varying degrees of success.
The best thing you can do to minimise corruption is to make it necessary to bribe so many people for the corrupt to achieve their goals that doing so would be uneconomical. The reason Qatar is hosting the world cup right now is because FIFA has a very small selectorate, and therefore it's only necessary to bribe a relatively small number of people to swing the vote.
Or you could just have strong (and enforced) laws that greatly limit how much power politicians have and then you wouldn't have to keep all these additional layers of corrupt politicians, institutions and government bureaucrats fighting with each other about who gets to be corrupt every 4 years.
How to achieve that is left as an exercise for the reader :)
E.g. Greece is being talked about as if it was somehow an immoral country that is constantly living beyond their means and somehow the Germans are the heroes who bail out the Greeks who used the debt to buy uh what exactly did they buy? German exports? Wait a moment. If Greeks are buying German products, why aren't Germans just buying Greek products instead of bailing them out? It would be mutually beneficial and solve the debt problem. It turns out, paying off the debt is the last thing Germany wants. If anything, it wants the debt to stay there to act out a nationalist hero role that is both counterproductive to German and Greek citizens and only really benefits the German export industry and the handful of workers directly employed by them.
For Greek products to become competitive in Germany, wages in Germany would have to go up. In other words, Greece is a scape goat to distract from domestic issues in Germany just like the EU was the scape goat for the UK.
Why do you think South Korea managed to do better than its peers? That’s the entire subject of the article and you don’t seem to have covered it at all
I wanted to look into this because that was my initial thought as well. I took the Corruption Perceptions Index [1] mentioned in the article and plotted it against the World Bank GDP per capital [2] for about 167 countries that had data in both sets. Indeed, about 60% of GDP can be explained by corruption level measured by CPI.
This, precisely. Basically, suffering and low-HDI is exported to developing nations, just like pollution was exported by moving manufacturing to these places. Since big players do not have to abide by international law and can pretend to care about human rights through virtue-signaling, we have whole continents with gargantuan inequalities. Any attempt by these abused nations to get together, be it through free-trade or other agreements, will be attacked by the elites in developed nations, either through their foreign policies (economic warfare) or under the hood by espionage/sabotage.
It's more about making the corruption accessible. Corruption is inevitable, this is covered in Plato's Republic and still holds true today. If people were not corrupt there would be campaigns to avoid political office, not seeking it.
The difference many times in the level of success of a nation is the level and accessibility of corruption. The US is extremely corrupt, political office is held almost entirely as a means of personal enrichment. Economic consideration is exchanged quid pro quo as a matter of fact in many scenarios. However these corrupt practices are carried out in an open format under a set of guidelines that mean anyone with money can access the corrupt system. Anyone can look at the system and say objectively "this is wrong" but doing away with it only pushes it behind closed doors and limits access to a select few.
If "Testing Theories of American Politics:
Elites, Interest Groups, and Average
Citizens" by Gilens et al. convinced you, then, you have reason to assume oligarchy in the US.
Whether you can assume the same in other well off countries is an open question.
Is it not strange that investment bankers get into state institutions?
Is it not strange that those rich countries do not mind your privacy (AMD PSP, Intel, ARM CPUs).
As if intelligence agencies form a hidden legislative role and they fear their own citizens.
Why is there a need to become like China?
Despite all that, people have many more potential conspiracies.
Popular ones are:
- Leader of the WEF
- Soros
- Gates
How valid those potential conspiracies are, is another question.
One example, Epstein supposedly killed himself.
Some people are sceptical about that.
But I would say: beware your confirmation bias.
Potential coincidence should not make you disregard due process.
In my estimation, you do not need conspiracies.
It is very simple, if you are very rich, you can buy yourself free from your duties (e.g. Amazon) and you can influence policy making (i.e., lobbying).
It is also easy to see why the US or rather the intelligence agencies engage in conflict (e.g. Taiwan/TSMC).
To be fair, an article on Vox says that the above finding is false.
It is hard to be certain on "truth" or to be "certain" at all.
You end up with beliefs (which has many forms: assumptions, trust, axioms, ...).
Better stay off politics and news.
Yeah, balancing both budget and trade imbalance (better yet, a trade surplus) should take a country out of poverty over time. South Korea turned from agrarian to massive tech exporter over the time talked about. I'm writing this comment on a Samsung phone BTW. Not every country can have a trade surplus though, that part is a zero sum game. Having your own currency is probably important with a trade deficit, so exchange rate can be used to prevent outflow of currency used locally. That and tarrifs.
A trade deficit is an investment surplus, and vice versa. It's not like one is always good or the other always bad, you can't reason like that from a single number.
Ok but why are poor countries financing the rich countries in this scenario?
I mean think about it. Country A borrows from Country B and buys Country B products, which effectively finances Country B companies. This is particularly bad when the imported products aren't physical capital but basic necessities.
Money leaving the country directly translates to lower levels of wealth. An exception would be capital expenditures, in which case it might be good. I was mostly referring to consumption though.
If your politicians are the most honest and working for the people, they can be branded as tyrants by the empire's propaganda machine which will use it as justification for military and economic warfare until they submit to the neoliberal rules based order. Look at many countries like Syria, Iran, and Cuba who are being crushed by crippling sanctions.
So I agree it has to do with bad governance. But you deflect all blame away from the people in those poorly governed country, instead blaming wealthy people in other countries. I’ll say though, the worst thing the West has done to the third world is insist on democracy. Peasants don’t know what they need government to do, and the political classes in those countries don’t have the maturity to steer them.
People in those poorly governed countries don't always have a choice. You could be living in such a country, see everything that's wrong with your political system and yet be punished for it nevertheless. There is a flawed assumption which infers that because the majority of people in a specific country are idiots, everyone who lives in that country should be punished... Imagine how hard life is for intelligent people in those countries who are ruled by corrupt fools, surrounded by gullible fools and utterly powerless to do anything about it. People can't choose the country they were born in so they should not be punished on that basis.
I keep seeing the word "punished" used as though there are some parents somwhere who are meteing out deliberate action against their children. It's not like that. It's just bad situations happening to adults and children alike.
The only antidote we know of is having democracy and free(ish) markets to allow as much agency as possible to accumulate to individuals, rather than to state officials.
> Imagine how hard life is for intelligent people in those countries who are ruled by corrupt idiots, surrounded by idiots and utterly powerless to do anything about it.
I think the "those countries" in your sentence could very easily include many rich countries as well as the set of countries you were originally contemplating.
Because "rich", in many definitions, is a moving goalpost. If you define rich and poor as related to some global average, inevitable differences (we are not a Borg collective) will always produce some rich and poor people.
If you, however, define "rich" and "poor" as related to a fixed criterion based on the necessities of life, like "will/won't suffer from starvation during their >60 year average lifespan" or "child mortality <2%": then the world is steadily improving and humanity has never been richer.
> Yet even though extreme poverty has fallen, in 2018 about 80% of the world population still had material living standards less than one-third of that in the United States.
That’s it right there. If wealth is relative then you can’t possibly create a system that will result in equality of outcome since we’re all born unique.
It is, not the pareto principle as such, but the basic laws of statistical distributions:
Depending on the underlying mechanisms, large systems will converge on some statistical distribution of outcomes. The easiest-to-prove mechanism that does this is the central limit theorem, leading to lots of those gaussian normal distributions out there. Slightly more complex, there is also the log-normal distribution, that also results from the application of the central limit theorem on logarithmic scales, e.g. for entropy domains. A log-normal distribution roughly adheres to the pareto princile (the tail looks like a power law, at least closely enough to fit the usual 80/20 shorthand). Power laws (or power law tails) also occur for similar reasons, and those are the actual distributions for which the pareto principle holds.
One has to expend lots of resources/energy/ingenuity to make systems not adhere to one of the aforementioned distributions, at least for t->\infty.
You are trying to put a racist spin on something that is simply a matter of time and circumstances: You cannot instantly, just by declaring it to be so, have technology, infrastructure, efficient agriculture. You need to start where you are and continuously improve the status quo in your country. That takes time. How much depends on things like corruption, means, climate, openness for change, local resources and topography. And of course there can be setbacks, e.g. if the aforementioned circumstances change. TFA has some nice graphs on that, where you can e.g. see the almost parallel development of USA, Germany and South Korea, just with different starting points in time. Otoh, there is another graph, where cirumstances changed for the worse, taking development down again.
A person's behavior and its abilities are determined by genetics ("nature") or family/society/circumstances ("nurture") or some ratio of mixture of both. Current political sensibilities prohibit talking about genetic aspects and demand that all, or at least as much as possible is ascribed to family/society/circumstances. Ascribing traits, especially negative ones, to genetics, is commonly called racism.
However, for the given discussion, it is unnecessary to dip into the nature/nurture debate and expose oneself to accusations of racism: People just are as they are, different in certain ways, which leads to differences in economic outcomes and therefore being more or less rich. Uniqueness isn't really a criterion in most cases, except sometimes if a society ruled by a uniquely crazy dictator. Usually, a lot of people, the society as a whole or at least a certain ruling class, determines the direction through their behavior. E.g. corruption, which is strongly correlated with bad economic outcomes, is always a problem of the society as a whole. That crazy dictator on top isn't involved in most of the corrupt interactions that happen.
OP said that we can’t possibly create a system which will result in equality of outcome, while quoting that 80% of the world are poorer than the average American. In that context, equality of outcome means that the whole world shares the same average. Maybe I misunderstood that part, but if that’s what’s being said, then I’m not sure what is that uniqueness. Surely, the fact the US exist is evidence that such a system is actually possible. Then why is it not possible for the rest of the world? So you’re saying it’s culture? That seems like something that can be changed. So can politics, obviously. So, what is the unique trait that will make sure there’s no way to achieve a worldwide average earning as an average American family?
Even if, by magic, you manage to get all the world on exactly the same income per family/person at one point in time, that equality will only last a moment. Add any amount of time with some random changes in society, environment, sunspots, whatever, and some parts of the world will decrease, some increase in income. One island might be the new hot vacation spot, the other might be unreachable due to storms for a month, or have a volcanic eruption. People might get bored and vote for some crazy asshat leader in some country. Whatever happens, the income distribution will, with time, spread out from the initial condition of equality, basic statistic says that it'll roughly look like a gaussian distribution getting wider over time (It won't be strictly gaussian, and look less so after a while, since there are boundary conditions and secondary effects like development aid going to the poorer).
We are not uniform, the environment is not uniform, resource distribution is not uniform, and even if you tried to make it so, it won't stick. Any non-isotropic planet will produce inequality.
For the example of the US being unique or special, that might not be permanent. And the usual explanations might not always hold. But in any kind of world we can imagine, there will always be some luckier and unluckier parts, resulting in inequality.
Now you can try to improve the standard of living all over the world (and of course people do that). But as long as e.g. the USA is still interested in improving their own standard of living, there will be a game of catchup that might be unwinnable. The only solution I see would be to cause e.g. the US to cease improving its standard of living. However, I'd consider that immoral and inhuman. Everyone, even the top half of the distribution, have the right to strive for something better.
> So, what is the unique trait that will make sure there’s no way to achieve a worldwide average earning as an average American family?
Geography for one. Countries have unique shapes, sizes and access to natural resources.
History for another. Chess is considered one of the most even games invented, but moving first has a small but distinct advantage. Countries that are more developed today have an advantage over those that are less developed. It’s possible to catch up, but it requires some advantage over other countries.
The thought that every countries advantages and disadvantages could be equal is vanishingly small.
Now if you’re born in a country with fewer advantages, you’re at a disadvantage even if you’re a clone of someone in a more advanced country.
Then throw in that we’re not clones of each other and that mental and physical disabilities are huge barriers to success through no fault of the individual.
For anyone interested in this topic, I can wholeheartedly recommend the book: "The WEIRDest People in the World" by Joseph Henrich.
The book provieds a beautifully constructed framework to understand culture and its effect on psychological development, as well as economic development.
1. In the book, the author argues that innovation rates of countries correlate positively with the psychological dimension of "individualism". (FIGURE 13.5)
2. The the dissolution of strong kinship ties correlates significantly with high economic growth. An argument the author repeats in his paper from 2022 [1]
My personal opinion is: gaining wealth is not a zero-sum-game, but a — the more participants the bigger the pie gets — kind of game.
I truly believe, if cultures and institutions change, everyone in the world can be wealthy. With "wealthy" I refer to the living-standard North-American or Europeans enjoy.
> My personal opinion is: gaining wealth is not a zero-sum-game, but a — the more participants the bigger the pie gets — kind of game. I truly believe, if cultures and institutions change, everyone in the world can be wealthy. With "wealthy" I refer to the living-standard North-American or Europeans enjoy.
I'm less convinced. A lot of the improvement to living standards in the west for the past 50 years or so have been a result of shifting labor to countries with lower standards of living. That being said living standards in post-war US is not a bad target and I don't see a physics problem with attaining that.
> living standards in the poorest countries in the world will eventually catch up to the United States
What part of the US? Because we're paying most of our income for a tiny two bedroom apartment and barely have enough money to afford groceries because the government took our SNAP EBT. We're paying almost $200/mo for 25Mbps internet and don't have any other options because the ISP here is a monopoly.
Sure we're lucky to have medical insurance, but it only covers everything except dentistry which is ironically what we've needed the most recently. Oh, and medical insurance is a thing you need here.
One reason is how much ever we try to disagree, the socio economic construct is still a zero sum game with an ever increasing pie. People who argue otherwise point to the size of the pie without practically ever stating what those in difficult positions can realistically do to get more of it.
Other reasons are that honestly there is not much "real work" to be done so we can argue that a very small % of existing population suffices for maintaining the system. The tiny elite (countries, billionares, intellectuals) essentially work towards maintaining their control over the system and resources.
FTA: In 2019 there were about 648 million people living in extreme poverty, subsisting on the equivalent of $2.15 per day or less. Those 648 million people made up 8.4% of world population — representing an improvement over 1990, when 35.9% of people lived on that little.
This seems to be the inverse of a zero-sum game: the West might have got a lot richer, but hundreds of millions of people were lifeted out of extreme poverty at the same time.
> This seems to be the inverse of a zero-sum game: the West might have got a lot richer, but hundreds of millions of people were lifeted out of extreme poverty at the same time.
Parent's thesis is that it's not a typical zero-sum game, but "a zero sum game with an ever increasing pie". It's an interesting idea; I don't know if there are formalizations of it.
Except it's not really a "zero sum game with an ever increasing pie".
Even if the pie remains exactly the same, it's not a zero sum game: simultaneous value for two people can be created out of nothing simply by the voluntary exchange of goods and services between them while everything else remains the same, see my other comment here for examples:
As another example more relevant for this context, poor people can exchange their time for money, which can then be used by them to acquire other things they value more than their time (food, housing, etc).
So yes, poor people can get themselves out of poverty even if the pie doesn't change. There are many examples of this happening (i.e. poor people lifting themselves out of property much more than the pie grows).
But of course, they can do that even better if the pie increases, i.e. if we get better at producing food and housing even more efficiently.
But even if the pie remains the same, value can be created out of nothing by the simple voluntary exchange of goods and services and poor people can also greatly take advantage of that.
It doesn't mean that some people have to lose something when poor people gain something. Both poor and rich people can simultaneously benefit from exchanging goods and services between them, while everything else remains the same.
If nothing else, because rich and poor people value things differently (and even among each group, at any point in time each person also values things differently to a great degree).
I wonder though - this growth has been largely taken out of ignoring an externality: the environment. We are living a global extinction event which will show up in the fossil record.
But what does this even mean? The buying power of the dollar (or its “equivalent”) where those people live can be much higher than in the US. (Unless you mean to compare with living on that much per day in the US.)
It means you have to spend close to your entire income to buy enough rice to not starve each day. Basically you are a subsistence farmer or equivalent, you don't have time or energy to do much else than work to not starve. You can't save up to buy a bike or a book, just work for food, all day entire life.
Add a bit more income and suddenly people can afford bikes and books if they save up, that is the lowest point necessary for people to start to pull themselves up and improve their society which is why it is so important to get as many people as possible to at least that level.
I think the logical fallacy is thinking about the economy as a steady state system. At any given time there are finite resources, so it is "zero sum" in that the pie is finite and slices can only be shared once.
That's not zero sum. The pie can be 100% finite and yet, while everything else remains equal, two people can both benefit and be happier at the same time by simply (and voluntarily) exchanging a good or service between them, because they value those things differently at that point in time.
If I have 10 chickens and you have 10 goats, we can exchange between us and each of us would simultaneously benefit more from having 5 chickens and 5 goats each, even though the pie hasn't changed.
Or maybe I prefer to have 8 chickens and 2 goats, while you prefer to have 8 goats and 2 chickens, and both be happier as a result by exchanging between us while the entire pie has remained exactly the same.
So happiness/usefulness/value was created by the exchange of goods and services even though the pie hasn't changed at all.
Also, these preferences can change over time, so value can continue to be created even if the pie doesn't change.
Entities without competition inflate prices until they capture all the extra new pie.
You receive increase in salary from your boss one year and next year it gets eaten away by monopolies like healthcare, education, housing and landlords.
Rent seeking may be zero sum, but the economy as a whole not. If we banned rent seeking the economy would likely grow faster. You could argue that's changing the game, but the economy is a weird one in that changing the game is part of the game.
We do ban a lot of rent seeking, though. For example, theft and fraud are rent-seeking activities. So the sorts of rent seeking that you still see are the ones that are hardest to ban.
Banning rent seeking doesn't work. Christianity tried banning interest and it just causes non Christians to offer lending services which then results in xenophobia. Interest payments partially derive from the liquidity services provided by market participants (think long opening hours and storing products ahead of time). Money effectively becomes a public institution where people voluntarily give it value in the form of liquidity services. That public institution is then kept in private hands who lend out money and then get to market these liquidity services as if they provided the public institution themselves. Basically someone else does the work and you get to benefit.
The answer to this problem is a demurrage fee on cash. Banks can then compete by offering the ideal negative rate that is in proportion to the liquidity premium. Banks can then use this fee to pay for liquidity services.
Is anyone doing this? No and I don't think it will happen in the next 30 years.
So rent seeking doesn't work because a long time ago one subpopulation banned it and it didn't work for the population as a whole? That's ridiculous. It's like saying prohibition in the US didn't work because booze was legal in Canada.
If there has to be poor people in order for there to be rich people, let’s make robots be the poor people.
The best endgame we can probably hope for is for there to be a sustainably small number of really comfortable, happy humans on this planet, and an army of robot servants/AI to keep us all fat and happy.
I used to have the same utopic dream, but I have started to question whether a "small number" is actually desireable. If everyone on earth is working on great things, having more people might be better. Maybe even Elons vision of people spilling out into the stars.
Everyone on Earth is contributing to the destruction of the ecosystem. "Spilling out into the stars" is impossible, there aren't enough physical resources.
But there must be a subset that isn't? A perfect sized human resource footprint to match earths carrying capacity?
And I'm not aware of any current physical limits to space colonization? I thought the main limit was energy, and the sun has a lot to give for a while.
That doesn't work. You have to pay the full costs of the robot yourself. If you hire a human the production cost of the human has been borne by their parents. In fact, employees are expected to pay for their own education via college tuition.
But the tiny proportion of very rich people can never get enough and therefore what will actually happen is we'll end up with an army of robot servants making the rich people richer and more comfortable, while the rest of us fight over the scraps.
The problem is that people think money is wealth, it is merely a claim to wealth. Each dollar is backed by a dollar of debt. That makes sense but it doesn't mean having more dollars means more wealth, it just means more dollars are necessary to run the economy.
If anything, a worshipping of money as wealth results in the opposite problem. People think they are wealthier than they are and then get disappointed, which is why governments and economists insist on permanent growth as debt increases.
A lot of wealth is not in the form of a stock but in the form of a flow. The wealth is alive so to speak and you must keep it alive if you want to benefit.
What are you talking about? Everyone is eating bigger pieces of pie these days. A lot of the things we take for granted weren’t even available to wealthy people one or two hundred years ago. Electricity, running water, sewage, pharmaceuticals, vaccines, effective surgery, motorized transport, sturdy housing. Not to mention the increasingly universal availability of education. Sure, some people still live in squalor, but it’s a rapidly shrinking percent of the world.
the developing world does not have access to TV Refrigerator and to a lesser extent Cellphone and our society and tech as we know it cannot produce the energy they need to power these appliances
Entry by multinational organisations was restricted as a means of maintaining its independence. South Korea also avoided ‘debt for equity traps’ when undergoing International Monetary Fund (IMF) stabilization policies in response to the debt crisis in the 1970s.
The title of the submission stands for "Why have not we managed to obtain a codified body of solutions from success stories".
And for "why we instead are beyond poverty", that is a most peculiar question to be asked to Hackers, crafters of tools, engineers, providers of solutions, efficiency augmenters.
What does being born have anything to do with the state of a society?
And if you want to go down that road then I'm wondering why we aren't considering before you are born. Or that when you are born you typically have your parents, siblings, etc. Not nothing.
Agrarian societies are historically composed of nearly all subsistence farmers. The industrial revolution changed that, but (unless you agree with Marx) it still doesn't seem like a foregone conclusion that "society" receives the wealth rather than it being concentrated in a few places.
The California coastline is a beautiful place. More people want to live there than can physically live there. Whoever gets to live there, by whatever means, has something that many people want. That's wealth, and it cannot be equally distributed.
If you were to start the world from scratch, give everyone $1000, hierarchies would still immediately develop. People have different affinities, skills, people encounter different ideas at different times, happen to meet people or live in a certain place during a certain movement. As long as people are free to exchange their resources, they will not end up equally distributed.
And even if we're talking about a post-scarcity Star Trek situation with replicators and holodecks, you still would never eliminate a hierarchy of value. Maybe everyone can live in on the California coastline in their holodeck, but the actual California coastline is still scarce, and people will still prize it. Or maybe Captain Picard hand carves a chair. It can be replicated exactly, but there will be a certain value to having the actual chair that he carved.
We're already seeing this phenomenon in a world with highly efficient and advanced manufacturing. We pay a premium for things that are hand made, simply for the fact that the process that produced the thing is inherently limited.
We'll never escape scarcity, and this is just one of the things that will always maintain a hierarchy of value.
Make the question smaller. Why isn’t all of America equally rich? Why aren’t all neighborhoods in your city equally rich? The answers are similar: historical path dependence, founder effects, compounding network effects, and fortunate or unfortunate accidents.
Much of the article focuses on institutions. So how would you characterize the institutions in poorer America as different? How, for example, does the historical dependency path manifest itself in the institutions of poor America?
It’s a factor and I think those that argue against it overshoot their case by completely dismissing it altogether.
Yet to argue that it’s a large factor you have to explain all the many cases of genetically almost identical populations with vastly different outcomes across either space or time.
By time I mean historically. Europe was a lot poorer than much of the Muslim world and the Orient until the enlightenment and the industrial age. Did Europeans suddenly mutate into a higher intelligence population?
Russia has been in steady decline since probably 1980 or so. Their ethnic makeup has not changed to any significant degree.
China exploded in the past 30 years. Probably even less genetic change there.
North and South Korea from space is the most dramatic example. That has an obvious political cause but the genes are about identical.
The variance in societal scale outcome just does not map well to human genetics, revealing it as a minor rather than a major factor.
I don’t know if I can fully agree. India and China made up 60% of the world GDP for over 2000 years of history. Does their decline into poverty mean there was a genetic change? Both those countries are now growing at very fast rate, has there been a change again?
Riches are the result of unrealized social interaction. Meaning that something of value has been given, but something of equal value has not yet been returned. Holding someone's promise to return on that value later is what makes someone rich.
Language barriers, political barriers, geographic barriers, etc. often prevent people from establishing the necessary social connections.
We've made tremendous strides in reducing those barriers but they have not been eliminated.
Free Markets - the biggest wealth creation engine known to man.
The most impressive and amazing reversal of fortune I've personally lived through was the switch from planned economy to free markets which took place in Eastern Europe after the fall of communism. You could even predict the degree of improvement or the trajectory of a country by the percent of the free market reforms vs protectionism left in place.
Of course, free markets require rule of law, so countries with a justice system controlled by an aristocratic class, clergy, dictator or political class will fail to acquire said free markets.
And reversely, the more populist politicians will get socialist policies voted through, policies which control, retard and corrupt the markets - the more their countries will slow down and be left behind. Case to the point - most Western European countries - after becoming incredibly wealthy after starting from scratch at the end of WWII to being left behind by the IT/computer revolution and becoming dependent on the cheap energy provided by a malevolent, war-mongering fading ex-superpower.
But why are free markets such an amazing success? Because they're the only mechanism which aligns and harness the humans' natural individual desire to improve one's station to drive and fuel the improvement of the whole society. A simple concept like "if each individual is allowed to decide and do whatever is best for her (and keep most of the result) then everybody will benefit" became such an subversive idea that dictators everywhere are still trying their best to extinguish it.
Labor market in Western Europe became so corrupted by leftist policies after the mid-20th century that it became basically anti-business. This affected startups the most, since businesses are most vulnerable in their startup phase. And the IT industry (unlike other old industries) was built almost exclusively by startups... Current idiotic policies (GDPR, USB-C charging) are just nails in the coffin on the inexistent European IT industry.
The second necessary component was capital. Financial markets in Europe were heavily regulated and taxed, with investing and especially angel investing actively discouraged.
The third component: universities were available in Europe as well. But without the first two parts the best and brightest europeans went to Silicon Valley to help build the US IT industry.
Because the immigration policy (the final component) was significantly more open in the USA as well...
I think that the "$2.15 a day" figure is very deceiving. A huge proportion of people around the world live largely without engaging with the currency system at all, so how much money they have is almost irrelevant to their life.
They have enough shelter and food and fulfillment from an established way of life that does not include money. So to say that they are in poverty because they don't use it shows at best an ignorance of the diversity of valid and functional lifestyles and cultures.
My country's(Poland) GDP per capita grew 8-9x over the past 30 years.
My personal take is that it's not just the political system during this time, but the transition from communism to a market economy that made it happen.
The centrally-planned economy back then had interesting features, among them generally full employment and frankly ridiculous expectations regarding the amount of work(at least in terms of hours).
All this proved to be fertile ground for a burgeoning hustle culture when people found that their labour can actually amount to something in a market economy.
My generation grew up with largely absent parents because in the 90s it was normal to have a side hustle or do overtime on a regular basis.
You see this a lot in other countries that were economically successful - with enough people disregarding their health and private life you can really move forward at a rapid pace.
I'm conflicted whether this is a good thing really.
Are you saying that organized production is the precursor to a wealthy market economy? That would mean a lot of text books would have to be rewritten, especially the ones that assume barter out of nowhere and then magically introduce money.
Money is basically the ability to get other people to do stuff for you. There have to be other people around worse off than you for that to work. Dense clumps of rich people are surrounded by people that will take their money to do stuff
I'm with you on this.. There can only be rich countries if there are poor countries.. Otherwise there would just be.. countries..
One of the reasons that the standard of living is so high in rich countries, is because we're paying poor countries to do the work + pollution, if they had as much money as rich countries, they'd be unwilling to do that work/polution for that price, and the "true" price of the work would reveal itself..
In Denmark, the vast majority of what's consumed is not produced in Denmark, that'd be too expensive and nobody would afford it.. Being rich is not about how much money you have.. it's about how much MORE money you have than someone else.
But that paying poor countries to do work, that's their current route out of poor. To take that away over some social-action-theatre objection is just cruel and thoughtless. From one point of view.
I'm not arguing that it's a good, just or right thing.. Only that it is. (this is not an argument for or against the status quo, only a statement of my interpretation of it)
I'm also not suggesting any course of action (including inaction).
I'm just saying that the way things are currently set up, it looks like rich countries are rich, but in fact, they're only rich in difference of wealth, that is, they're only able to sustain their high standards of living by the fact that other countries are substantially worse off, and so will provide them with goods and services at rates far lower than they themselves would be able or willing to work for.
To be purely rich, a country would be able to maintain such standard of living entirely from using its own goods and services, which is rarely the case.. Except for the ultra-wealthy, most people in "rich" countries cannot actually afford to exclusively consume the goods and services produced by their peers.
This seems like an emotional reaction to a very valid point.
If everyone on earth had fair wages things would be far more expensive. Part of what makes your phone affordable is cheap labor in terrible conditions.
What happens when those countries start to be less poor? The answer is that the rich countries will find another group of poor people to make their stuff. This is likely why rich people, like Bill Gates, are obsessed with Africa.
When we find the magic wand to do that, I'm not sure I'd wave it but ok.
'Fair wages' is tossed around a lot. I'm not some money-grubbing oligarch but imagining you can control wages has a pretty bad track record. It's going to take more than talking about the end game, to come up with a game plan.
Anyway, I don't think I'm being any more emotional that the knock-off remark I responded to. If I came off as reactionary I apologize.
...and its because they give all the shitwork to 'poor countries'. (Work which, of course, we used to do here in this rich country).
It's that blanket assertion that everything is just this one way. That's easy to say. Nothing was offered to support it. The reader is assumed to agree because it's obvious.
I'm sure the maker of a remark holds fairly exclusive privilege to declare it off the cuff or not, mostly that is done as an excuse for when the remark was later refuted or otherwise got them into trouble..
My remark was well-prepared, you may not agree with it, however, I am the one who made it, and I did not make it off the cuff..
Did you mean that you made an off the cuff remark, and wanted to refute your own remark?
Wealth is unevenly distributed because the acquisition of wealth by agents is (and has been) unevenly distributed.
What property do all extant technologies possess (that some, yet undeveloped technologies, may not,) that has ensured that none of them have been able to flatten that distribution? Is it comprehensibility?
I thought this question was a joke based on the title. Our economic system itself creates inequality between nations. It's in the best interest of wealthy countries to keep developing countries poor so we can continue extractive processes for their resources. I wasn't aware the question had 'vexed economists for decades'.
You can say the same of inequality within a country. Wealth accumulates because we have an economic system where the few are able to extract value out of the many and are protected in their position both with prevailing ideology and state power.
> It's in the best interest of wealthy countries to keep developing countries poor so we can continue extractive processes for their resources.
it really bothers me that people think this is an OK thing to do. We can choose to improve both the importing and exporting countries when these negotiations are set up, but we don't, because it's cheaper to turn people into slaves and drive them into the grave.
There are exactly zero people on this planet (or any other) who could convince me that collective altruism would not benefit everyone both immediately and in the long term, yet every single politician or statesman or business owner from any country seem to think that domination is the best option.
The amount of suffering that happens in this world because of money just stuns me every time I think about it. We are a garbage species, doomed to self-destruction, because of money and our apparently inextinguishable desire to have more than everyone else.
I will never understand the species or the society I was born into.
I sympathize with the sentiment, although I don't blame the issues on a dearth of altruism. If you grew up in the 1400's could you expect widespread equality during feudalism? It doesn't matter how magnanimous a king was, inequality was built into society. The question then becomes, IMO, what sort of economic organization would help solve these issues?
there is no economic system which treats people equally, and there never will be, because it is the creation and use of money which turns good people into bad people.
money is Aladdin's Lamp; money grants wishes, and no matter who you are or what you have, you will always want more. there will always be a non-zero number of people who want "more" enough that they feel it is ok that others suffer so that it be obtained.
humans create economies wherever they go, and they always have.
money takes no action on its own, so humans are the problem. we will be our own demise.
our end will not be due to a supernova or space aliens or anything outside of our own control. we will destroy ourselves unless we somehow change ourselves enough that Aladdin's Lamp no longer holds sway over our lives. that will not happen for 100,000,000 generations of humanity, if it ever happens.
it is in our very being to destroy things or people for personal gain, and everyone who thinks they are entitled to do it will do it.
we may never truly fail as a species (though that is definitely within our reach today) but we will not succeed as a species, either. Aladdin's Lamp is always too close.
Money has existed for a long time, but only recently has the pursuit of profit become preeminent. I'm of the opinion that democracy and universal suffrage creates as equal a system as we can hope for, my issue isn't with money or economies per say... the subject I was trying to broach was democratic ownership.
to be clear, I don't care if people are allowed to get rich. that's fine. If you're skilled enough to get rich, then you should be allowed to get rich. I hope that rich people are altruistic, and some are, but most aren't. whatever.
what really, really rubs me raw is that we let people fall out of society and into nothingness. livable minimum wage should not even be a discussion. Free physical and mental healthcare should not even be a discussion. affordable housing should not even be a discussion - these are all table stakes for a society that is worthy of existing. No one should be left behind. be as rich as you like; just don't be so greedy that you take someone's ability to live freely away from them because you don't pay them enough, and now they can't afford rent or gas for their car.
I guess that makes me either a socialist or someone in favor of very strong welfare policies, but whatever you want to call it, it's the bare minimum that a society should offer its citizens, imo. the whole point of a society or of a nation is that the citizens are taken care of, be it from foreign invader, or domestic threat. those kinds of things are why the collective resources of the people are pooled. that's the whole reason. i see no difference between people dying of poverty and people dying because of bombardment.
Well, I agree but the problem is the nature of money itself. So far no country has adopted a neutral money system.
If you give people a different money system e.g. like the Chiemgauer, they suddenly behave very differently. That kind of questions the whole human nature is the problem thing, if human nature is this fluid or whether there is a government monopoly that forces a specific "human nature" onto people.
It sounds like just how communism dooms a country to self harm, capitalism forces people to do self harm of a different kind.
I've been deeply interested in this issue for years, and my impression is that IQ just isn't that strong a lens of analysis. It's incredibly difficult to prove which way the causality goes.
A quick example of this: There has yet to be an IQ test (that I'm aware of) that participants can't increase their score in by studying/practicing. This implies that groups with higher IQs may just be unintentionally 'studying' for IQ tests in their education/environment, putting the ball back in the socioeconomic/environmental factors court.
The validity of IQ itself remains a hotly debated topic, let alone how that might affect the development of nations. You're much more likely to be productive as a researcher of this topic, I think, by leaving IQ out. Just like this article, and these comments.
Imagine an agrarian low density country. There are no IT professionals in this country. Everyone more or less works for themselves on their homestead. The division of labour and the economies of scale basically dont exist.
As this country migrates to inudstrialization, what its really doing is implementing the economy of scale. It's difficult to get going though, if everyone is a poverty farmer, nobody is buying your widget. We have however measured and seen this entire process happen in about 50 years, several times now to huge success.
Despite this, people still believe the economy is zero-sum. These Malthusians in their politics believe that for the western world to be rich, requires them to rob the wealth from other countries. Which certainly has some truth to it.
This isn't how it works however, you can have a free trade agreement with palestine, but if nobody actually tries to trade goods, buy or sell goods. it doesnt matter. Each side in this trade of goods thinks they are getting a deal, otherwise they wouldnt do it. So we should in essence end up with excess on both sides. If someone selling their goods in palestine to germany has buyers. Then they can invest in producing more of those goods off the same labour hours.
The malthusians, aka world economic forum, believe we are in fact zero sum because there are so many metrics since 1971 showing we are zero-sum. They aren't wrong. So what happened?
So basically what happened is the gold standard broke. In so doing, these fiat currency countries technically lose the ability to tax. Instead of tax, they should be printing the money they spend and NEVER take any debt. When they tax AND print money causing inflation. It's a double tax and removes, paying taxes on taxes on taxes.
Basically government is paying for itself, or rather failing to pay for itself by having circular taxation. This however breaks the economy and turns it to zero-sum.
This is why you also see everyone promising to lower taxes, if fiat currency without gold standard is going to stay, politicians basically have to reduce taxation to 0. The problem, they aren't doing it. They want to do little kickbacks to their supporters in specific tax deductions only.
South Korea's success also stemmed from centrally-planned authoritarian regime. Park Chung Hee made it happen because only through economic success can country achieve the necessary status on the world stage.
But Park Chung Hee could not have done it alone. It was koreans humility and willingness to be guided that achieved this dream. For example if we compare the generation that built Korea and those from Eastern European countries there is a stark difference. Koreans believed that through hard work and capitalism and by generating wealth they will increase the living standards. In EE countries this generation despite being as uneducated as the koreans believed that the wealth "exists" and it should be distributed by the state and that they work enough in honest jobs. They never understood how wealth generation works.
> They never understood how wealth generation works.
From your description, neither did Koreans. You say they "believed" and that they were "willing to be guided". It was exactly the same behind the Iron Curtain. People believed in the vision of their leaders and were willing to follow them along the path they wanted to take. The only difference is that the vision of communist leaders was less practical than that of similarly authoritarian but capitalist regime.
The funny thing is that centrally-planed economy might have become a more practical choice now due to IT revolution. I think it will pay off to look at what happens in China in the next decade.
Fundamentally, the more value you create, the richer you become. If you take two equal cave-men, and one builds a house and start farming stuff and the other not, then suddenly you have one rich that possesses all the value in the world, and one poor guy that has nothing.
There is nothing wrong in this dis-balance, it's just natural. The rich one did not steal from the other and does not owe him anything.
So the right question is "What prevents the other caveman from creating value?". Historically it was access to resources, how the climate favored access to food, etc...
But now that science and technologies can do wonders, we are indeed often left with political barriers to the development.
The world runs on debt. You need people/countries in debt in order for the system to operate. Here is an example of a country which tried to escape it and didn't fare well. It might also have had something to do with it being socialist.
It might also have had something to do with having a planned economy unable to fulfil the most basic of the population needs, from food to toilet paper. Rather shocking for a country that used to be Europe's wheat exporter before installation of communism and Russian-controlled puppet regimes.
I read "Childhood's End" by Arthur C. Clarke when I was young. If you read it: the aliens that take over and control the Earth very quickly make production so efficient, global that the work week is reduced to a day or two. No starvation, everyone has a home, comforts.
science fiction is easy. the reality would probably look very different.
in my opinion statism is at fault because it is the manifestation of "let us, here, very locally, protect each others shit, while exploiting all the others"
this thought, or concept of "us and them", (for some it starts even more locally: "mine/yours") divides ppl and funnels assets to those that can afford them.
average downvoter "but mlatu, dont you own a car? what if someone took it from you?"
me:"in this society? that would be theft, and i'd have to call the cops and my insurance company because im still paying that rustbowl off! but imagine instead, if i could trust that there was a different car available so i still could get home, i wouldnt mind it, or if i could trust that there was another as-good solution to getting home as me driving my car there, let me use it!"
society could be based on sharing instead of on hoarding... one if these days ill have the time to develop some societal simulation model or something...
"owning property" used to be very important, when there were only a couple hundred million of us on this rock, but i believe, the longer we remain on-planet, the more important it gets to overhaul that in favor of equaly sharing all resources.
all in favour of fully automated luxury gay space communism say "where's mah figs?"
Think about it. Did people know there was such a think called "poverty" before some people started hoarding everything and not sharing it?
That's capitalism!
Maybe some people do not mind living in "poverty" and just because you cannot convince them to buy into your false dichotomy does not mea there is something wrong with them.
> Did people know there was such a think called "poverty" before
Diogenes the Cinic 2400 years ago reportedly lamented hunger (and the absence of shortcuts to curb it, NSFW). That is the poverty contextual to the article.
And even the frugal can be hungry: that is the meaning of poverty in the article, and the analysis is about a solution against it - because whether you embrace the idea of "[GDP-based] growth" or that of "frugality", hunger is a bad state to live in. The point of the article is about "how to have growth", and it is a transposition on different assumptions of "how to have food even though you are frugal". Diogenes was frugal and, reportedly, occasionally sadly aware of his factual poverty.
And the situation of the people fighting starvation, how do you call it? Indigence?
What would be this "poverty" you are talking about, which would be different from indigence - and surely it is not the pauperty of personal choice, which existed well before Newcomen, well before the Medici, even before the Sumers had barns according to some?
'Poverty' means "improductivity". But it is most commonly used for "indigence". Beggars are indigent, but not paupers, to your scheme?
There is a documentary - I think, "Kubrick's 2001 Space Odyssey" - in which «hoard[ers]... not sharing» are seen: monkey resemblant hominids: it implied that the discovery of scarcity was very ancient.
The article refers to "rich" as "beyond the unsatisfied need for food, water, sanitation, health, shelter, education and information", then as GDP (PPP, presumably).
The proposed idea would have the article state that South Korea etc. progressed as they did because they had others work for them. Were this the case, it would have to be defended through some good evidence - which Dietrich Vollrath will be happy to receive, by the way, since the article is about "How come we could not identify a recipe".
You can make the whole world not poor (and quite a few people not as rich as they are). Solution is simple - allow free movement of goods, services AND people. Perhaps also follow-up with allowing anyone to buy any piece of land anywhere so that rich can also buy up cheaper land (fair deal?). A lot of reasons for conflict (and need to organize around nation states) will stop remaining so important. I guess, one can dream...
There is a finite amount of (usable) land in the world. If it is all for sale, what is there to stop the rich from buying all of it, and then collecting rent for eternity, becoming ever richer in the process? How is a return to feudalism your dream?
> what is there to stop the rich from buying all of it
Isn't that already the case though? I'm not aware of any country that limits how much land a single person can legally own, just prohibitions on which people can own it (i.e. I can't buy land in England because I'm not an English citizen).
I’m not against this a priori but I’d expect this to also generate new levels of inequality. As the rich get access to larger playing fields their wealth can grow that much more. Even if true, whether this is bad or not is probably subjective.
I used to think this way, but I tempered my belief to say that all poor countries need a brief period of extreme free markets. 50 to 100 years. After that, some regulation will be needed to manage the undesirable tradeoffs of that period
One mentally blacklist some countries because of their genocidal histories and preserves positive or not-that-bad opinion on some other countries which frequently were the victims... and then one learns more about the histories of these other countries...
Neither the original post nor this answer make clear sense in the context.
The original post seems to relate that "South Korea went from 6% of the GDP in the USA in 1953 to that of the UK in 2020" with a history of dictatorship, while the point of the article is exactly the - noted - "strangeness" of the results.
The above reply mentions some quality in products of Samsung while the article is explicitly about the difficulty of understanding why «Samsung, Hyundai or LG» became what they ended up to be.
(And the first half dozen posts seemed to try and throw an answer to the title, as if its closing question mark made it an open quiz.)
South Korea tried their take on Wirtschaftswunder. They had a model and they knew how to achieve it through propping their industries. To some extent you could say they were state owned companies as they were intentionally directed to do certain things.
Yes, but the point of the article is that research does not seem to have been able to point out what exactly were the "learnt lessons", the winning components in those «propping» and «direct[ing]».
My personal (purposely incomplete!) answer is because the whole world doesn't deserve to be rich.
Imagine this scenario to help understand why:
Let's say the top richest people gave away so much money that every person on earth was a millionare.
What would happen?
People wouldn't change their spending and other habits, in fact they would buy more useless stuff.
Prices would thus rise and rise until they matched the new million-fold buying power. (Think about this: Would you keep your pretzels at $0.50 if you knew everyone was a millionare? Ofc not.)
And then? Then we would be right back to where we started: Most people would be just as poor as before, and the rich would be just as rich as before.
To the downvoters: I'm genuinely interested in your serious rebuttals of my hypothesized scenario.
As mentioned in other comments, you can't escape scarcity. If everyone became a millionaire overnight, would there be enough mansions for everyone to buy the next morning? How about PS5s? How about steaks? It's wishful thinking and politicization to pretend otherwise.
Scarcity will always exist. However, the system we are in doesn’t exactly make the best use of resources.
Some things are artificially scarce, like diamonds. Other things are made to be cheap and disposable like clothing so you’ll buy more in the future. And other things are made proprietary so that you’ll have to buy multiple of the same thing.
A simple example of the last point is modern consoles. PS5s and XBoxes are basically PCs at this point. Yet they are made to be incompatible and minimally upgradeable.
>Prices would rise and rise until they matched the new million-fold buying power
Prices would rise, yes. But they would not rise proportionally to the increase in purchasing power.
At the extreme case, imagine a person with $0. If they are given $1 million, they are now ∞% wealthier. If the cost of food rises 1,000,000%, they can still afford more food then before.
But prices won't rise that much. Your 50¢ pretzel might cost $1,000 now. But that won't last: if you can get an extra $1 million by selling 1,000 pretzels, people will do that. In the medium term, the supply of pretzels will increase and maybe the price will drop to $100.
I am not implying that wealth distribution solves scarcity. But it does redistribute power and resources, so that everyone's desires and needs are more equally catered to.
Yes because the system is built to support certain types of people.
If we are playing monopoly and you’re good at monopoly then it makes sense that you’d likely win if we started over. Also, some people are smart enough to study the game and emulate good monopoly play but they’re not naturally good at it.
However if we switched to another game you might lose your advantage.
You are completely out of touch with the reality that the majority of the human population still faces. What would realistically happen was that people would buy washing machines and have more time to read books with their children.
The formula is pretty simple. The US not only allowed South Korea to pursue export oriented industrialization, it actively encouraged it. It saw South Korea as a military bulwark against the Soviet Union.
Why can't every country follow in its footsteps? Well, some did and were encouraged for similar reasons. Taiwan, Japan, etc.
However, without preferential access to the markets of the world's richest nation(s), export oriented industrialization becomes very difficult if not impossible. You cant incrementally build up your car export industry if you can't sell your cars. This is, broadly speaking, why we have a Daewoo but no equivalent for, say, Ethiopia.
The US generally prefers not to encourage EOI. It usually prefers to stripmine poor 3rd world countries and sell luxuries to their elites instead.
It's a combination of a lot of factors. Access to a rich market is one thing but protecting your own markets against much stronger competition is another.
South Korea was a mercantilist nation and it protected its core industries in the early stages. That's why companies in traditional industries (construction,banking,insurance,food etc etc) in Korea are still mostly Korean when in Eastern Europe they are German,French,Italian etc etc
>protecting your own marketing against much stronger competition is another.
That's the whole point. Most countries that do this are locked out of rich markets. They're said to be competing "unfairly". They know mercantilism works they just can't practice it without being slapped with countervailing tariffs.
It was US policy both to allow and encourage mercantilism for South Korea because that meant it could function as a military bulwark against the communist nations surrounding it.
They're not locked out, they just might have to pay retaliatory tariffs. The whole issue is countries that institute such mercantile tariffs in the first place tend to be exactly the ones where elites do not believe in export-driven growth, and pursue failing top-down schemes that increase their own petty influence within those same countries.
Most poor countries only have investment in extractive industries (oil, minerals, etc), which employ very few people, and the skills they learn are next to useless for anything else. The next rug up the ladder is places like Cambodia and Bangladesh, where investment goes into labour-intensive but low-tech industries like making clothes, but the government is too corrupt and the people too badly educated for much more. Although Bangladesh, in particular, has been a quiet success story lately, eclipsing India in GDP per capita.