A surprising observation was made in a talk at Hillsdale College last month:
Finally, the big transformation that has been predicted for a generation now—-that power would shift from the U.S. and Europe to Asia and other places—-is now measurably underway. In the 1990s, between the Gulf War and the Iraq War, the U.S. and its Western European allies controlled 70 percent of world GDP; that number is now 43 percent. The West still does relatively well, but not so well that it can count on the rest of the world to rally behind it automatically. Whether in victory or defeat, Americans may be about to discover that you cannot run a twentieth century foreign policy with a twenty-first century society.
All my life I have assumed that the USA is so big and powerful that it could do whatever it wants all around the world. Also that the USA is inherently virtuous. That the first assumption is no longer reliable is cause for some humility with respect to the second.
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Spreading GDP among more nations is a good thing. That broadens markets for the industrial countries.
Put another way, if a select few had 100% of the world GDP, we lose a market of most of the world. In a perfect world, GDP would be equal per capita everywhere. Of course that won’t happen anytime soon. The West demands cheap clothing and baseballs.
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GDP is not a fixed sum to be redistributed. There is no benefit to equalizing it.
GDP is a function of productivity. In poor countries, productivity is extremely low. By making those countries more productive, they not only produce more to trade for what they need, they increase the GDP of the world as a whole. Everyone benefits when productivity anywhere is raised.
They way that is accomplished is through the Rule of Law, free markets, and Capitalism.
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I never suggested we redistribute by fiat. The goal of more equal economies is doable by education, healthcare and employment. Empowerment of women can make huge inroads also. Finally, corruption a lead reason for keeping the Third World behind. Not just internal corruption but from the industrial nations too.
Remember that the borders and ensuing domestic strife in many Third World nations, particularly Africa, were set up by Europeans for their advantage.
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Corruption is certainly a problem, you can’t have free markets and corruption too.
But keep in mind that poor countries by definition lack the capital to improve their lot. They must be “exploited” by a foreign power that does have capital to invest go get that first step up on the ladder.
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“ They must be “exploited” by a foreign power that does have capital to invest go get that first step up on the ladder.”
The problem with that is the inevitable revolutionary violence that results when the colony tries to toss the chains of colonial rule. By that time, the corrupt exploitation will have permeated the local leadership. End results vary, but stable democratic republics are not generally the system that takes root.
We were an anomaly. The revolutionaries in America were the same peoples as the rulers in England.
More often we see some form of communism sold to the people in return for a dictatorship. When that inevitably fails, a right wing autocracy finds room to bring “law and order” at a huge cost.
And the people are still poor.
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The cure for that is for third world countries to invite investment from multiple private investors from different countries.
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In an ideal world that would be the case. But colonial powers made sure the local leaders were brought into the fold via wealth and power. Over decades, that sets the tone for corruption as a way of governance and life.
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What colonial powers today?
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The damage was done up until the late 20th century. Tribal affiliations and histories were ignored. After all, “the Africans” all looked alike to the colonizing states.
Same in the Middle East.
We are still fighting the Civil War after 160 years, so to expect harmonious results in other nations more recently freed is ludicrous.
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If you have a time machine, go back and fix it, but otherwise we have to do what works going forward.
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Of course, but it certainly helps to know how it
happened in order to work some reforms.
So long as industrial nations can bribe local leaders for favorable treatment, the rule of law will not take place. And, as you mentioned, “you can’t have free markets and corruption too.”
In the ideal world, of course.
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RE: “Spreading GDP among more nations is a good thing.”
The metric is “controlled” not “spread.”
One economy’s GDP is to some degree another economy’s consumption. I think the metric means that the U.S. once consumed 70% of global export production, and now consumes 43%.
That would mean that the U.S. faces a significant reduction of global influence in the same way that a buyer that buys less has less influence over the seller.
Think of it this way. If the world doesn’t want to sell to the U.S., the U.S. can’t force the sale.
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