On Technology, Prosperity and Dysfunctional Ideologies

We take it as a given, almost a fact of nature like the seasons or the geography of continents, that different parts of the world enjoy different levels of prosperity. But there’s nothing “natural” about this since this is almost entirely within human control. The differences are stark, and at one end of the scale, heartbreaking. Consider the extremely rich first. Luxembourg has an annual per capita income of over $110,000, Norway over $100,000, Switzerland around $85,000. Those are small countries and outliers with perhaps little to tell us. But the US is large and has an annual per capita income of $53,000. Why is it so rich?

At the other end of the scale are Burundi and Malawi with only $200 or so annual per capita incomes. Why are they so poor? The richest countries are around 500 times richer in per capita terms than the poorest. What accounts for this inequality in incomes of countries? That question has engaged the attention of people for hundreds of years — starting with of course the great Scottish economist Adam Smith who inquired about “The Nature and Causes of the Wealth of Nations” in his famous 1776 book.
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Wide-bodied Globalization

Hi from Edison NJ. Got here from Mumbai on Wednesday morning at 4:40 AM, nearly an hour ahead of schedule. Too damn early. I suppose if the flight was arriving at 11 PM, then it would have arrived an hour late. Natural perversity of the universe. OK, I am done with the complaining bits. Now for the good bits.
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In Praise of Dead White Men

Brazilian President Luiz Inacio Lula Da Silva’s recent accusation that the financial crisis was caused by “white people with blue eyes” at a joint press conference with UK Prime Minister Brown is illuminating if not entirely accurate. [1] Everyone involved in the financial crisis certainly does not have blue eyes, although they may all be uniformly white. Da Silva claimed that he had never met a black banker. Continue reading “In Praise of Dead White Men”

India and Australia

There can be no doubt that Australia is looming larger and larger on the Indian horizon. Speaking personally, thanks to my participation with the LAFIA2008 — Leading Australia’s Future in Asia-Pacific — delegation in July, I have gained an increased appreciation of the issues that will draw Australia and India into a deeper strategic and economic relationship.
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Religious Affiliation in the US

A NY Times report by Neela Banerjee refers to a new survey of religious affiliation by the Pew Forum on Religion and Public Life.

The report shows, for example, that every religion is losing and gaining members, but that the Roman Catholic Church “has experienced the greatest net losses as a result of affiliation changes.” The survey also indicates that the group that had the greatest net gain was the unaffiliated. More than 16 percent of American adults say they are not part of any organized faith, which makes the unaffiliated the country’s fourth largest “religious group.”

The money quote for me is:

Muslims rival Mormons for having the largest families. And Hindus are the best-educated and among the richest religious groups, the survey found. [emphasis added.]

Now that is what I call globalization: India importing the Indian rate of growth from the US. Notice that the socialistic Nehru rate of growth of 2 percent per year was prevalent for nearly forty years after India’s independence. Only in the mid 1990’s did the pace pick up — around the same time that Indians started making it big in the US.

Debunking Myths about China and India

Pranab Bardhan, a professor of mine at UC Berkeley, whom we have met before here (see Crouching Tiger, Lumbering Elephant, and Pranab Bardhan on the Indian Economy, for instance) has an excellent article in the Boston Review titled “What Makes a Miracle: Some myths about the Rise of China and India.” (Hat tip: Yuvaraj Galada.)

He states the standard view explaining the rapid growth of the two countries:

What explains this strikingly rapid growth? The answer that continues to dominate public discussion in the United States runs along the following lines: decades of socialist controls and regulations stifled enterprise in India and China and led them to a dead end. A mix of market reforms and global integration finally unleashed their entrepreneurial energies. As these giants shook off their “socialist slumber,” they entered the “flattened” playing field of global capitalism. The result has been high economic growth in both countries and correspondingly large declines in poverty.

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Blinder on Offshoring

Alan Blinder claims that “Free Trade’s Great, but Offshoring Rattles Me” in a Washintonpost.com article. He has dug up an old 2004 US election issue. He begins with

I’m a free trader down to my toes. Always have been. Yet lately, I’m being treated as a heretic by many of my fellow economists. Why? Because I have stuck my neck out and predicted that the offshoring of service jobs from rich countries such as the United States to poor countries such as India may pose major problems for tens of millions of American workers over the coming decades. In fact, I think offshoring may be the biggest political issue in economics for a generation.

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