Rx for Global Poverty
 

Sammendrag:

Globalisering, villighed til at acceptere konkurrence og lav statelig kontrol, god regeringsførelse og åbenhed, men  ikke nødvendigvis demokrati. Villighed ovenfor udenlandske investeringer og kontakt er grundlaget for at få folk ud af fattigdom - IKKE udviklingshjælp, som dog har sin berettigelse i katastrofehjælp - på lang sigt hjælper den ikke til udvikling. Du kan læse den korte artikel og de mange, mange kommentarer den udløste

 

By Robert J. Samuelson
Wednesday, May 28, 2008; A13
 

 

What's the world's greatest moral challenge, as judged by its capacity to inflict human tragedy? It is not, I think, global warming, whose effects -- if they become as grim as predicted -- will occur over many years and provide societies time to adapt. A case can be made for preventing nuclear proliferation, which threatens untold deaths and a collapse of the world economy. But the most urgent present moral challenge, I submit, is the most obvious: global poverty.

There are roughly 6 billion people on the planet; in 2004, perhaps 2.5 billion survived on $2 a day or less, says the World Bank. By 2050, the world may have 3 billion more people; many will be similarly impoverished. What's baffling and frustrating about extreme poverty is that much of the world has eliminated it. In 1800, almost everyone was desperately poor. But the developed world has essentially abolished starvation, homelessness and material deprivation.

The solution to being poor is getting rich. It's economic growth. We know this. The mystery is why all societies have not adopted the obvious remedies. Just recently, the 21-member Commission on Growth and Development -- including two Nobel-prize winning economists, former prime ministers of South Korea and Peru, and a former president of Mexico -- examined the puzzle.

Since 1950, the panel found, 13 economies have grown at an average annual rate of 7 percent for at least 25 years. These were: Botswana, Brazil, China, Hong Kong, Indonesia, Japan, South Korea, Malaysia, Malta, Oman, Singapore, Taiwan and Thailand. Some gains are astonishing. From 1960 to 2005, per capita income in South Korea rose from $1,100 to $13,200. Other societies started from such low levels that even rapid economic growth, combined with larger populations, left sizable poverty. In 2005, Indonesia's per capita income averaged just $900, up from $200 in 1966.

Still, all these economies had advanced substantially. The panel identified five common elements of success:

 

· Openness to global trade and, usually, an eagerness to attract foreign investment.

 

· Political stability and "capable" governments "committed" to economic growth, though not necessarily democracy (China, South Korea and Indonesia all grew with authoritarian regimes).

 

· High rates of saving and investment, usually at least 25 percent of national income.

 

· Economic stability, keeping government budgets and inflation under control and avoiding a broad collapse in production.

 

· A willingness to "let markets allocate resources," meaning that governments didn't try to run industry.

Of course, qualifications abound. Some countries succeeded with high inflation rates of 15 to 30 percent. Led by Japan, Asian countries pursued export-led growth with undervalued exchange rates that favored some industries over others. Good government is relative; some fast-growing societies tolerated much corruption. Still, broad lessons are clear.

One is: Globalization works. Countries don't get rich by staying isolated. Those that embrace trade and foreign investment acquire know-how and technologies, can buy advanced products abroad, and are forced to improve their competitiveness. The transmission of new ideas and products is faster than ever. After its invention, the telegram took 90 years to spread to four-fifths of developing countries; for the cellphone, the comparable diffusion was 16 years.

A second is: Outside benevolence can't rescue countries from poverty. There is a role for foreign aid, technical assistance and charity in relieving global poverty. But it is a small role. It can improve health, alleviate suffering from natural disasters or wars, and provide some types of skills. But it cannot single-handedly stimulate the policies and habits that foster self-sustaining growth. Japan and China (to cite easy examples) have grown rapidly not because they received foreign aid but because they pursued pro-growth policies and embraced pro-growth values.

The hard question (which the panel ducks) is why all societies haven't adopted them. One reason is politics; some regimes are more interested in preserving their power and privileges than in promoting growth. But the larger answer, I think, is culture, as Lawrence Harrison of Tufts University argues. Traditional values, social systems or religious views are often hostile to risk-taking, wealth accumulation and economic growth. In his latest book, "The Central Liberal Truth," Harrison contends that politics can alter culture, but it isn't easy.

Globalization has moral as well as economic and political dimensions. The United States and other wealthy countries are experiencing an anti-globalization backlash. Americans and others are entitled to defend themselves from economic harm, but many of the allegations against globalization are wildly exaggerated. Today, for example, the biggest drag on the U.S. economy -- the housing crisis -- is mainly a domestic problem. By making globalization an all-purpose scapegoat for economic complaints, many "progressives" are actually undermining the most powerful force for eradicating global poverty.

 

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Rx for Global Poverty

Attacking globalization undermines the most powerful force for eradicating global poverty.
 - 

By Robert J. Samuelson

 

Comments

davidlouie wrote:

Re: Kurringai - Correction, I should not have referred to the long term economic growth trend as the CAL. The CAPM and CAL is a way to come up with the slope of the long term economic growth trend. It would be real easy to show the concept with a graph but I think I am confusing things by trying to describe a graph in words.

To keep it simple, market controls will reduce the fluctuations both above and below an economies long term growth rate but at the cost of lowering the long term growth rate.

5/29/2008 9:27:03 PM

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davidlouie wrote:

Re: Kurringai – I should have mentioned in “Part 2” post below the CAPM was developed to model portfolios in financial economics. You are not going to see it mentioned in Macroeconomic books. The theory and rational behind the use of the CAPM in financial econ holds true if applied at the Macro level as well, which is why I used it in a Macro Econ application.

5/29/2008 6:53:51 PM

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davidlouie wrote:

Re: Kurringai – Part 1 - This would be a great discussion to have in person but the scope of our discussion has already grown too far for me to effectively address every point but I’ll address what I think are the most important.

Basically to summarize your position, and correct me if you define it differently, but you are advocating a modern day version of mercantilism. The strengths and weaknesses of that school of thought are well documented in other places so I won’t go over them. Some of the ideas behind mercantilism have made a resurgence in the last few years and there are lessons that can be learned and applied in selective situations but overall as an economic system it is suboptimal at promoting economic growth and development.

In regards to capital formation and the role of government and regulation. I think you greatly over credit the role and effectiveness of gov/regulation in the process. The only role government played in your counterexamples was that of occasional financier and lender of last resort. That is sometimes necessary in economies with primitive or poorly developed financial markets and extremely high risk (i.e. war torn/disaster prone areas) but in today’s global economy; emerging markets have tremendous access to private investment capital made available thru the global financial markets. Building protectionist barriers around an emerging market limits their access to global/foreign investment limiting them to the resources of their own internal markets which is more limited and comes at the cost of consumption and other priorities. Perhaps more importantly, increased government control and regulation reduces entrepreneurship slowing capital creation. Entrepreneurship is essentially what you want to promote if you are trying to further develop your economy. Government controls if properly implemented can help control the fluctuations and reduce the risk in an economy but risk and the opportunity to be rewarded for taking risk are important ingredients to promoting entrepreneurship.

There are many reasons for the post WWII growth of the US but the policies of the New Deal were not significant ones. The US was and still is the largest relatively free market in the world (as I mentioned in my prior post, the larger a free market is the more efficiently it tends to perform) and the simple fact that every other significant economy in the world was decimated by the war giving us a huge lead over every other economy which they are just recently beginning to catch up to us from. (on a side note: an unfortunate lesson I think we as Americans took away from our long period of economic dominance because of this, is that we have a sense of entitlement to being the worlds greatest economy and tend to think it will always be that way. We are ignoring systematic problems in our economy such as our tax structure and aspects of our regulatory environment that need to be reformed if we want to maintain our status as the worlds dominate economy.)

The Cato link was interesting but it documented the failure of state intervention in capital projects. I’m not sure how that supports your analysis.

I think you are drawing artificial distinctions between internal and external markets. An internal market is simply an economic area with no boundaries within it. If you eliminate the boundaries between two external markets you are left with one larger “internal” market. Large “internal” markets can work very well for all its participants. The 50 US states are a case in point. Free trade is simply an attempt to expand the “internal market”.

The health care system is one of the most highly regulated industries in the US. 50% of health care is government provided and the other half is heavily regulated. I agree it is a mess but it is a better example of how government screws it up. Health care however is perhaps the most difficult industry to analyze and is too complicated to meaningfully integrate into a general discussion of the economy and economic development.

5/29/2008 6:29:24 PM

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davidlouie wrote:

Re: Kurringai – Part 2

Are you familiar with the Capital Asset Pricing Model (CAPM)? This would be real easy to explain in person with a pad of paper to help visualize.

Essentially, economies face a choice between balancing economic growth, economic stability, and other non economic priorities. Ignoring social priorities that come at the cost of economic development, economies focused on economic development have to balance between growth and stability (i.e. mitigating the possible effects of recession and economic down turn). Government regulation if properly implemented can help create economic stability by creating safety nets, financial controls, and thru many other means that help reduce economic risk when the economy hits a down turn. However it comes at a cost to long term growth.

The long term growth of the economy can be thought of as the slope of the Capital Asset Line of the CAPM with the monthly and yearly growth of the economy fluctuating up and down centered on the CAL. The peaks are the economic booms and the troughs are the busts. Government economic controls seek to minimize the downs/busts. This also means that the ups/booms have to be minimized since it is the booms that create the busts. The result is an economy that fluctuates less around the long term economic growth trend. However by reducing the fluctuations/risk of the economy you are also flattening out the slope of the CAL lowering the long term economic growth trend.

It is not necessarily a bad thing to minimize economic fluctuations (nobody like recessions) and is entirely reasonable for a well developed economy (i.e. Europe has stabilized much of their economy reducing the risks but also leaving them with relatively low long term growth rates). However an emerging economy wants to promote growth to reach a higher level of wealth and standard of living, not stabilize the economy at a state of poverty. That’s why free markets and trade can be so beneficial to poor and developing countries.

5/29/2008 6:26:22 PM

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dsar wrote:

I want to shower of many thanks to Robert to bring the Issue timely, in a manner that proves highly relevance on current "Globalization" process and its success and failure. I also want to thank the "21-member-ed Commission on growth and development". Their assessment indicated that overall globalization process yields some majority success, but in some minority parameters where some failures incurred. The Committee squarely blamed on regional Cultural differences and political restrained imposed by regional political masters.
I do agree to the special committee on their overall general assertion, but I feel strongly that they have omitted a vital ingredient in their assessment procedure, "Population growth Factor".
I am nor sure whether They have done it deliberately or that omission was over sighted mistakenly?
Unrestricted [and threatening] population growth for last two centuries have created serious imbalance between "Supply and Demand". Though the "Pan- Globalization" have brought some solvency and upliftment of poorer groups in some countries and their stander of living improved, but in many more counties These poorer have fallen below the poverty line and became more worse of.
The reason for this due to unrestricted population growth, & is itself an added factor to be included to the factors sighted by the Panel.
The beneficial effects of the Pan-Globalization, are been diluted due burgeoning Population growth.
On hypothetical scenario- If You handout $100 to 10 people, then each will get $10 dollar to spend. But then if you give same amount to fifty people then each will get only $2, and these $2 holders are worse of and their purchasing capacities are drastically reduced. With same logic- Mother Earth possesses limited resources and She can not feed every body.
What are the Core Principles of Political Economist in 1830? I siting here the core principles of the genius- Thomas Robert Malthus ( 1766-1834).
1-Food is necessary for human Existence.
2- Human population, if not checked, tends to grow faster than the power in the earth to produce subsistence
3-The effects of these two unequal powers must be kept equal.
4- Misery is the mechanism that balances human requirements and available resources.
5- Nature's requirement that the imbalance between demand and supply forms the "Strongest obstacle in the way of any very great improvement of society", and thus makes "the perfectibility of man and society"- a theoretical and practical impossibility.
6-The Principle of population, i.e.,the inevitability of misery due to the power of population to over helm resources, provides the mainspring behind the advance of human civilization by creating incentive for progress.

What we are seeing in 21st. Century?
Advent of new technologies that applied in Mechanical industries, Chemical industries, Energy industries, Pace industries and aggro-industries. So modernizations that helped to offset the pressure power of Population growth. But these technological marvels have come to a saturation points. They no longer keeping pace with population growth. As all know that we ended in to the era of diminishing return.
However our Mother- Nature is some how wedges war against the power of population growth. I mean -Global climatic changes, Weather Calamities[ Hurricanes, Tornadoes, Earthquakes, Tsunamis, Extreme droughts and Floods]. Plus political unrests, dysfunctional political systems of some countries, Terrorism and wars on terrorism, religious fundamentalism's are on the rise with main purpose of cutting off "over- Population".
conclusion - We have no escape from this Armageddon, if we do not start the process cutting Population growth immediately and with Ernest- trying with all sincerity.

NB. Malthusian principles are more relevant in this 21st. Century.

5/29/2008 8:16:34 AM

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kurringai wrote:

part 1

David Louie: Excellent post, thanks.

Just quickly I'll go through the points. I think we say some similar things and draw opposite conclusions. I believe mine in these cases is the more accurate take.

"However you seem to be trying to make a case for protectionism and government controlled markets. There are sometimes a time and place for such things but generally free markets (and I use the term relatively since as you pointed out there are no truly perfectly free markets) have greater long term economic growth and development than less free markets."

This is where I dispute that the wealthy capitalist states are "generally free markets". They are highly regulated. I do agree that there is an +ideal+ time and place for protection and subsidies - by which I mean a complete necessity. At capital formation time. Even the WTO agree with me on this these days.

"You make the case that almost all developed nations today industrialized using protectionist policies. That is true but I would argue they managed to create their wealth despite their protectionist policies and government controls, not because of it as you argue. "

The evidence is against you. Those countries which attempted capital accumulation without highly regulated markets have failed to develop. Those that have had highly regulated markets have become the most powerful markets and countries on earth. At a certain point, after tye accumultion phase, it is advantageous - necessary - to +advocate+ for free markets, forcing weak, resource economies to open while reneging on doing the same. You're not watching an economic model unfold, you're seeing an ethical unravelling via state force, necessary to keep the more powerful capitalist states expanding, to prevent them from imploding.

"An example is the US. In 1776 the US did not have a perfectly free market but it had the freest market in the world at the time and for the next 150 years. During that time it went from being a minor economy to the largest in the world. The US is basically a collection of 50 individual economies tied together in one greater free market economy. "

This is where we part company while agreeing on some of the same basic facts. The US union, the Prussian-led German customs union and British empire mercantilism all share some similar elements. None of them could be called free traders for one very simple reason. Trade between elements that exist under a federal structure with a moderatley strong central framework is by definition internal trade. This internal mechanism is intensified by rejecting trade on the free trade model from the broader world, which is precisely the path pursued by the above three trade unions and +++by the EU currently+++. No one would call the EU a free trade advocate although everyone knows it as a free trade zone. Its central regulatory authority is weaker than the US one in the 19th century, it has national governments and so on.

"The New Deal was not the greatest era of wealth creation. The GDP of the US never reached the level it had in 1929 before the New Deal until the wartime economy of WWII and after the New Deal had ended. The New Deal itself had mixed results and it never succeeded in fully restoring the pre depression economy."

Yes it was. Perhaps I should say the most sustained and useful period of wealth creation. In any case GDP is a poor measure of the wealth of individuals in an economy since it is a collateral figure. While it has continued to grow since the 1980s, wealth differentials have exploded.

GDP had begun to go through the roof since about 1941. What you don't say about the New Deal is that the entire regulatory apparatus of the United Staes was either created or restructured by it and that it is directly those institutions that created this long, low wealth differential, high standard of living.


"Second, you say no Corporation has ever built a large infrastructure profitably without government help. That is false. The early US canal projects in New York, Louisiana, and other parts of the country in the early 1800’s were private ventures."

I think you'll find they were backed by the government, which either made soft loand, assumed the bonds of failing canals or covered the private deficit of failing operators with ex post facto taxation. A few canals were built by private money with no US government help, but htese were not huge infrastructure efforts, often just moving ore from the mine or directly related to the profitability of the corporation building it. Much the same happened in Britain. Here is a study by the Cato insitute which thinks far more like you than me.

http://www.cato.org/pubs/journal/cj22n2/cj22n2-4.pdf

5/29/2008 4:05:25 AM

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kurringai wrote:

part 2

“The transcontinental rail road was a private venture. “

Ditto as with canals. Private money with large public risk for the most part. Expropriation of land, government guarantees and soft loans. Taxation.

"There is the internet"

A product of the US university system and largely publicly funded..

"the US cell phone and telecom network,"

Supported in large part by massive contracts and government guarantees. Pentagon.

"the entire oil refining industry is a massively expensive infrastructure,

Ditto. Include wars.

"Wal-Mart is a massive supply and distribution infrastructure"

Please. It ships goods to its stores. That's all. And yes, I read some time ago it builds its own ships. But this is an internal infrastructure, created on a scale appropriate to the biggest company in the world and has no applicability to the public realm.


" half the private electrical power industry… I could go on forever. "

Me too. These industries are all intimately connected with the government in a way that externalises their risk to the public. You're making my point.

"Government often chooses to control certain kinds of infrastructure such as roads, airports, etc but that doesn’t mean they are better at building and running it, usually it is the opposite."

On the contrary, government has a solid record of doing just that. Where private industry does it, it only will tackle it if the risk is externalized to the public. This is +not+ private enterprise. It's merely shifting the bureaucracy and profits into the private realm while externalizing problems to the public and the government. The US health system is the example par excellence. It's a basket case.

"Emerging economies such as China, India, most of the rest of Southeast Asia, Eastern Europe, Latin America, and others are undergoing a bumpy ride but overall their people are better off in terms of living standards and overall wealth and getting even more so the more they promote free trade and capitalism."

Wrong again. Latin American growth stagnated during the freest trade in its history. 20 years has seen only impoverishment for the majority and a revolt by them from the wealth you say they received by opening markets. The growth in Argentina, Venezuela, Brazil and Chile has never been higher since they threw out the Globalization apparatus and adopted controls. Malaysia exited the Asian crisis by doing the same and regulating currency. The other economies go into +my+ column as they are examples of highly regulated trade.

Re your comments on capitalism and scale, they interest me but I'd have to think them through a bit.

Thanks for an interesting conversation.

5/29/2008 4:02:12 AM

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tc125231 wrote:

Perhaps it is unfair to blame Mr. Samuelson for writing such utterly knuckleheaded columns. Upton Sinclair is quoted on the subject:

“It is difficult to get a man to understand something when his salary depends upon his not understanding it.”

Mr. Samuelson’s masters are doing quite well out of globalization. 1/10 of 1% of the population now controls 5.6% of the national income. This is a high since they began keeping records. THEY like globalization. So Mr. Samuelson had better keep finding reasons to support it.

Nonetheless, it is usual to informally review the history of the arguments for globalization. When I attended graduate business school 26 years ago, it was all David Ricardo and comparative advantage.

“The principle of comparative advantage shows that even if a country has no absolute advantage in any product (ie. it is not the most efficient producer for any good), the disadvantaged country can still benefit from specializing in and exporting the product(s) for which it has the lowest opportunity cost of production.”

http://en.wikipedia.org/wiki/Comparative_advantage

This was believed to have been completely proven, and immutably true. Anyone who questioned the revealed wisdom was treated as mentally challenged. However, some problems have arisen. One is that –even if the overall income of America has benefited from globalization, most of the population demonstrably has not. There are a variety of reasons for this. Krugman discusses some of them more intelligently than Samuelson here:

http://krugman.blogs.nytimes.com/2007/05/14/notes-on-514-column-divided-over-trade/

Now, however, the new cant is MORAL: “_Well, hey, globalization may not be good for EVERYBODY, the way we said, but it’s good for the world.”


Actually, what would be good for the world is less people. (I encourage people to look at Fallow’s recent picture of conditions in Beijing, here:

http://jamesfallows.theatlantic.com/archives/2008/05/seventy_three_days_to_go.php

Even Samuelson manages to mention that there are over 6 billion people alive today. However, Bush and the neocons (including Samuelson) have not publicly favored family planning, the financial and educational empowerment of women, or any of the factors that are known to reduce population without catastrophe.

So now, when their economic arguments no longer hold up, the stalwart Samuelson re-introduces the morality argument for his masters. We must support globalization or we won’t be good people.

I have only one thing to say: “Pfui!”

5/28/2008 10:58:49 PM

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Lavrat2000 wrote:

To TOminOhio -

Letting the Third World migrate at will to the First World will ensure povery for the First World. The Third World needs to stand on its two feet without its hands stretched out for freebies.

5/28/2008 10:56:27 PM

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TominOhio wrote:

The facet of globalization which would be of greatest benefit to the poor of the world is the right of migration, the ability to move where your labor is best rewarded. Migration would speed poverty reduction more than any conceivable free trade or investment scheme, yet is opposed by none other than Robert J. Samuelson. So don't complain about the progressives and union leaders standing in the way of progress. Physician, heal thyself.

5/28/2008 10:44:37 PM

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AmericanInterestsFirstandLast wrote:

So, Samuelson does not think Japan and China received foreign aid? Nonsense. American manufacturers along with others in the developed world have invested billions in plant and equipment along with precious technology in both nations, but especially Red China.

Further, the U.S. manufacturers who invested there made it a condition for such investment that the U.S. market would be virtually tariff free and that the Yuan would further be grossly undervalued.

Foreign Aid from the United States and the resulting destruction of U.S. manufacturing and the dismissal of millions of Americans in well paying manufacturing jobs has and is costing this nation dearly.

Until these suicidal policies benefiting a few entrepeneurs bent on profits at any cost are radically changed or junked our nation will for all practical effect be extending foreign aid to the Chicoms on a scale never before seen in the history of world and certainly of a sort Adam Smith and the rest of the Free Traders never contemplated and would never countenance.

Globalization and Free Trade as practiced by the U.S. is self-defeating and destructive to the well-being of the American people both in the short and long-runs.

The weak dollar, more than twenty years of increasing current account deficits, and currently the runaway cost of crude and energy and growing domestic inflation are all traced in large part to the fact that Samuelson and the MNC Oligarchs have been successful in selling the trusting American workers on the benefits of Free Trade, Globalization, and those wonderful "cheap imports" which are now costing this nation very dearly indeed.

5/28/2008 10:28:30 PM

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edlharris wrote:

Don't forget.
Samuelson told Ron Smith of WBAL 1090AM that he doesn't read these comments because he has a job.

5/28/2008 10:00:35 PM

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dittomom wrote:

BRAVO! FINALLY a clear, sensible view of how to begin to erase poverty. Capitalism works wonders! Individuals want nothing more than to work to provide for their own families. Socialism, government driven aid DOES NOT WORK!

5/28/2008 8:49:34 PM

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fishingriver wrote:

Mr Samuelson- You understand absolutely nothing about poverty. Reading your ideological input on an issue that is so central to human suffering makes me want to vomit. You are a shameless minion of greed. I hope poverty pays your life a visit so that you might begin to truly understand.

5/28/2008 8:17:06 PM

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DwightHCollins wrote:

to solve the problem of unemployment, corporation must fully staff their corporations in every nation they do business with. no 1 x manager for the world, instead 1 x manager per country until the world maintains a balance and every one stands on their own feet.

5/28/2008 7:33:57 PM

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Pantoufle wrote:

You guys are missing the point re. population growth and this article. Samuelson's goal was not to discuss ways to eradicate global poverty - in which case, you would be right. His goal is to circle the wagons and protect at all costs his little Marxist-Utopian great-equalizer of "globalization" now that there is a backlash.

5/28/2008 7:22:51 PM

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davidlouie wrote:

Re: Kurringai - I certainly am not going to disagree with you that the US is not a perfectly free market. I’m not going to argue with you that some regulation is good. I’m also not going to argue with you that the US may be disadvantaged in many of its free trade agreements (I said this before when I mentioned the trade bias toward imports and against exports caused by our tax system).

However you seem to be trying to make a case for protectionism and government controlled markets. There are sometimes a time and place for such things but generally free markets (and I use the term relatively since as you pointed out there are no truly perfectly free markets) have greater long term economic growth and development than less free markets.

You make the case that almost all developed nations today industrialized using protectionist policies. That is true but I would argue they managed to create their wealth despite their protectionist policies and government controls, not because of it as you argue. Free markets are not the answer to everything, things like geography, resources, social stability and cohesiveness, etc. factor strongly into economic development but with other things equal, a nation with freer markets versus another with less free markets is going to experience greater economic development and growth.

An example is the US. In 1776 the US did not have a perfectly free market but it had the freest market in the world at the time and for the next 150 years. During that time it went from being a minor economy to the largest in the world. The US is basically a collection of 50 individual economies tied together in one greater free market economy. There are very few barriers to trade between states. Not every state has benefited equally from the internal US free market but they have all benefited greatly and even Americans living at what we consider the official poverty level still live better than over 90% of everyone else on the planet.

I could go on and on with examples but I would be here typing forever.

You made a few errors:

The New Deal was not the greatest era of wealth creation. The GDP of the US never reached the level it had in 1929 before the New Deal until the wartime economy of WWII and after the New Deal had ended. The New Deal itself had mixed results and it never succeeded in fully restoring the pre depression economy.

Second, you say no Corporation has ever built a large infrastructure profitably without government help. That is false. The early US canal projects in New York, Louisiana, and other parts of the country in the early 1800’s were private ventures. The transcontinental rail road was a private venture. Many of the first roads in the US were privately funded and built toll roads. There is the internet, the US cell phone and telecom network, the entire oil refining industry is a massively expensive infrastructure, Wal-Mart is a massive supply and distribution infrastructure, half the private electrical power industry… I could go on forever. These are all examples of infrastructure built and run very profitably by corporations with little or no government help. Government often chooses to control certain kinds of infrastructure such as roads, airports, etc but that doesn’t mean they are better at building and running it, usually it is the opposite.

Economies with greater market freedom generally experience greater economic growth and development than less free markets. Emerging economies such as China, India, most of the rest of Southeast Asia, Eastern Europe, Latin America, and others are undergoing a bumpy ride but overall their people are better off in terms of living standards and overall wealth and getting even more so the more they promote free trade and capitalism.

A little off topic but related to globalism and free trade is capitalism and free markets work better on larger scales. A society and economy that is too small is going to suffer from many market imperfections and isn’t going to work as well as a larger capitalist economy and society. Capitalism is an economic system that doesn’t work well on a small scale but works increasingly better on larger scales. Communism on the other hand is an economic system that works well on a small scale but doesn’t scale well to large economies. Economic socialism is in between. The fundamental economic problem with communism was that as an economic system it couldn’t handle the size of the economies of the USSR, China, etc. and compete with similar sized capitalist economies or provide the same standard of living or wealth. On the reverse, certain small economies may benefit somewhat from gov/state control but that benefit disappears the larger an economy gets and the US economy is well past that size.

5/28/2008 7:21:30 PM

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ghostcommander wrote:

How many men. women and children are there living in poverty in the USA? How does 45.000.000 sound? Those Americans who lost the 3,000,000 high paying manufacturing jobs are now working minimum hourly wages-some two jobs. Can they buy a new automobile, a new home, and can they afford to send just one child to college? How many Mexican farmers went out of business because they could not compete with dumped low price agricultural products by the American corporate farms? Does 1,000,000 sound about right? Well, it is right. Can the African cotton farmers compete with subsidized American cotton farmers? The answer is no. Samuelson also failed to use equalized wages in his comparisons. The cost of living is cheap in many countries and should be calculated in. A good source on each country is the 'CIA world fact book'. Many third world countries have high birth rates, low death rates and no growth in their economy. Until birth control and an increasing economy is achieved in those countries, there will be human poverty, social problems, and governmental problems. Otherwise, there is no hope.

5/28/2008 6:51:55 PM

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Lavrat2000 wrote:

Samuelson ignores the chief reason some nations are poor -- they have population sizes which exceed that of their country and resources to meet. Population increase is the chief cause of poverty in the Third World. The world simply cannot sustain the billions of people that increase annually.

Curbing population is NOT somehting anyone will talk about - it is the elephant in the room. Before Nature kept the population in balance with their resources through famine, disease, drought etc. Now the UN and various NGO rush into to abort Nature's effort to balance the population with the environment of the area. We would do better to let Natural handle the situation.

The world's population cannot continue to increase. This increase in population is one of the largest causes of global warming. Every person on the planet increases global warming. It is imperative that poulations be curbed, by force if necessary, so that in the areas of the world where resources are limited the population does not continually increase into a area of international beggars.

Most of the Third World, which is one of the reasons it is the Third World, is overpopulated -- look at India, Bangladesh, various African Nations etc. -- they have more people than their countries can support given the state of their nations resources. These countried must be made to under that mandatory population control is essential for survival.

China is right in its one CHild Policy and more national should adopt a similar program. The US is wrong to give asylum to those escaping this policy -- we should support the one child policy and refuse asylum to anyone using this as an excuse. One Child is a good policy and more countries whold emulate.

5/28/2008 5:38:19 PM

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Lavrat2000 wrote:

The best RX for global proverty is population control. There is simply not enough land an resources for the world's growing population. Every birth contributes to global warming and food scarcity.

INstead of sending in the UN and NGO to feed these people, it might be better off if we forced them to survive on what they have and then they may learn the lesson of too many people and insufficient resources. It is not the job of the First World to continually give hand outs to the THird World. They either learn to make do for themselves or do without. That was nature's lessons 100 years ago and it is still the best lesson out there for these people

5/28/2008 5:35:07 PM

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