Update: Grim, who comments below, has a thorough answer to this article over at his own site.
I recommend the National Review article this week on the subject. I don't think it is the most stunning thing I've even read, but it's true enough, and I loved the simple expression of the obvious, "To know the actual economic history of enrichment and civilization, you have to know the numbers. Most people don’t," and the follow-on "The surpassingly wise Swedish professor of public health Hans Rosling reported that even well-informed people score worse than a chimp would throwing darts at the numbers." Anyone who can keep that in mind deserves further reading.
I have long contended that the conventional wisdom on any topic often installs itself to deny an uncomfortable truth, not summarise the truth. It's a GK Chesterton idea, though he was quick to point out that it was the common belief of those who consider themselves the educated classes which are more vulnerable to this. The wisdom of crowds is real on many physical events, but this does not extend to opinions, where that wisdom is not an average of many independent evaluations, but a reading of the room of what is the most socially useful thing to believe. We have to live in a society of some sort, and we trim our sails in order to strike the balance we want between getting along, fitting in, and distinguishing ourselves in the internal competitions for status and good.
I think the article overstates the case, as sharp practice and cheating others may not have been the central driver of wealth, but it did contribute some. Yet there was an excellent example from Noam Chomsky when he used to speak on campuses. He was very good at giving opponents arguments that were unexpected and a little indirect, knowing that few would have the ability to think on their feet quickly enough to articulate the refutation. (It didn't work with Buckley, if you've ever seen the video.) In redirecting from the improved global wealth once there were free-market economies, Chomsky would state that the standard of living for slaves increased in every decade after 1800, but did that mean that slavery was a good thing? And dare people to defend slavery. He caught many people on the hop with that. But it occurred to me (it probably wouldn't have in time if I were in the debate) that it wasn't a good defense of slavery, but it was a helluva good one for the free market. If you are living in a situation with little freedom, where the leaders are unconcerned or even hostile to your improvement, and you still get richer, it means that something about that system must be working. AFAIK, no one ever said that at the time.
You could quibble about a few details (were Iceland, Ireland, India and the Congo colonies in the same sense of the word?) but generally spot on. And it is by Deirdre McCloskey of all people. Like many clever-silly people, when s/he has sense to speak s/he speaks it very well.
ReplyDelete...as sharp practice and cheating others may not have been the central driver of wealth, but it did contribute some.
ReplyDeleteIt seems to me that she deals with that contention several times, and in some ways refuting it is the underpinning of her entire essay. She notes that transfer of goods or labor by fair means or foul does enrich the receiver but it cannot account for the expansion of the standard of living for people who are far removed from the transaction. The Dutch can be said to have gotten a legendary deal obtaining Manhattan for some blankets and trinkets but at the time they didn't know what it would become two centuries hence any more than the Natives did. There isn't much left at Jamestown or Plymouth. That the Saudi princes lined their pockets and Saddam Hussein focused on purchasing weapons rather than developing their people is not entirely the fault of the Anglo companies which developed the oil fields.
I have a significant objection to this article. There is also a minor objection, which is that the conceit of the article -- 'you have to look at the numbers' -- is accompanied by a hand-wave about what the numbers might be. How much does one get from killing a man and taking all his stuff? Might be 20 percent; 100 percent; whatever. Without some clarity on that matter, I'm not sure how useful the discussion is.
ReplyDeleteEven granting that the real source of the increase is the free market -- things like the miracle of compound interest, or the ability to invest in growing industries and factories and the like -- the premise leaves out something very important about how one obtains the capital to make such initial investments. Let's say that, due to these economic miracles, we could become rich with an investment of merely $100,000 -- that this will produce an increase like she's discussing, so that it will become worth $2,500,000 in time (and that will continue to grow).
Yet I do not have an extra $100,000 to invest. If, however, there is a legal and successful way for me to rob another man for it -- taking it out of him in labor, or a legally contrived way of stealing his house, or whatever else -- then I can make the investment. And then I will become rich, and my descendants even richer! He will become destitute, and his descendants will not enjoy the increase in wealth that mine do. They may become better off if 'a rising tide lifts all boats,' as they may become well-paid servants of my descendants. Nevertheless, the initial theft really matters and produces long-term differentials in wealth and power.
I'm inclined to go on about this at length, with specific historical examples, but this is long enough for a comment and conveys the basic idea.