Tuesday, May 6, 2014

The Greatest Achievement In History

From the great Arthur Brooks, of The American Enterprise Institute:

The achievement shown on this chart is possibly the greatest accomplishment in history.

"What did it? The United Nations? US foreign aid? The International Monetary Fund? Central planning?
It was globalization, free trade, the boom in international entrepreneurship. In short, it was the free enterprise system, American style, which is our gift to the world.
I will state, assert and defend the statement that if you love the poor, if you are a good Samaritan, you must stand for the free enterprise system, and you must defend it, not just for ourselves but for people around the world.

It is the best anti-poverty measure ever invented."

(And we did it by not really trying!  If you keep the bureaucrats, academics, government munchkins, and other trolls busy chasing their tails, there is no limit to human accomplishment.) 


Anonymous said...

Actually what caused this was mercantalism, neo-mercantilism, and industrial policy.

Free trade has been a spectacular failure getting poor countries out of poverty. Almost every rich country became that way because of protected trade policies.

Example: Japan (and South Korea emulated this): After WW2, free trade advocates told the Japanese government to utilize comparative advantage and trade in what they were most specialized in at the time: silk, rather than continually bail out failing companies like Toyota over and over again and imposing import quotas on mostly American made cars. Instead, Japan ignored that and kept on bailing out Toyota until they could get on their own 2 feet and compete on the world market (easier to do without American competition in their own country). South Korea followed a similar philosophy.

America followed Hamilton's program which became known as the American School of economics:


This included the following:

1) protecting industry through selective high tariffs (especially 1861–1932) and through subsidies (especially 1932–70)

2) government investments in infrastructure creating targeted internal improvements (especially in transportation)

3) a national bank with policies that promote the growth of productive enterprises rather than speculation.

Not surprisingly, our greatest periods of growth were during the time these protectionist policies were in place.

Japan and South Korea actually sent students to America to study this and they learned about Hamilton's program and this influenced their protectionist economies; Hamilton is praised there.

Now look at China today: Many industries require foreign industrialists to partner up with state owned enterprises (SOE's are making a big comeback thanks to China's success) in order to even do business there, they subsidize their industries (see: using dumping as a competitive advantage, which the US deems an illegal trade practice), manipulating their currency to make their products more competitive, etc.

Neo-liberal policies (and when i say liberal, i mean the libertarian definition of the word), OTOH, have mostly been a dismal failure. Poor countries (mostly in Latin America, Southeast Asia, and Africa) were told to do the opposite: Free up trade, let interest rates naturally rise, and lower government deficits, yet this hasn't helped those countries become wealthy. No country is going to build serious industry with t-shirt sweatshops, you need to find ways to either give preferential treatment/subsidies to make valuable capital to be imported in (like China) or you need to protect your own industries until they can stand on their own two feet (like the US/Japan/South Korea, etc.).

Anonymous said...

Oh and i forgot to add one thing, China's complete lack of respect for private property and their own citizen's lives are also a very big subsidy/competitive advantage; with the amount of pollution that companies are allowed to do there, it's no wonder that companies flocked there to do business. Of course, this comes at a huge costs: see this article about "cancer villages":

Unknown said...

Companies like Toyota succeeded because Toyota produced a superior automobile for less money. There are plenty of nationalized and supported companies out there that produced nothing and created little value.

You really have no concrete evidence for your claim, just one or two examples.

"Neo Liberal" also does not really mean "libertarian."

Your comment is just a grab bag of assumptions with some vague examples that don't really conclusively prove your point.

China's economy lanquished until free market reforms took hold after the late 70s. Sure, it isn't a "free market" economy, but they made many of the changes that you say are bad for an economy, and they experienced massive growth relative to what they experienced before. The same can be said for India.

Plenty of other countries have dismal respect for private property and lots of pollution, and they haven't experienced growth similar to China's, so there's probably something else driving China's growth, ie expansion of free trade that has taken place since Xiaoping.

miriam sawyer said...

The greatest achievement in history was Norman Borlaug's improvements in agriculture, which increased crop yields and saved thousands, maybe millions, from dying of hunger.