How rich countries die

[David Farber <dave () farber net>]

Begin forwarded message:

From: dewayne () warpspeed com (Dewayne Hendricks)
Date: April 12, 2009 10:02:07 AM EDT
To: Dewayne-Net Technology List <xyzzy () warpspeed com>
Subject: [Dewayne-Net] Re: How rich countries die

[Note:  This comment comes from reader John Quaterman.  DLH]

Subject: Re: How rich countries die
Date: Sun, 12 Apr 2009 06:24:45 -0400
To: dewayne-net () warpspeed com
From: "John S. Quarterman" <jsq () quarterman org>
Cc: "John S. Quarterman" <jsq () quarterman org>
> From: Steven Schear <schear.steve () googlemail com>
> Date: April 10, 2009 3:31:54 PM PDT
> To: Dewayne Hendricks <dewayne () warpspeed com>
> Cc: "Andrew M. Odlyzko" <odlyzko () dtc umn edu>
> Subject: How rich countries die
>
> The link below is a detailed review and summary of a book that, since
> I never get enough time to read books these days, I probably won't be
> able to read. It helped me understand a number of things going on in
> the world today. The thesis of the book is that prolonged periods of
> stability in a society result in an accumulation of institutions that
> [coercively] prevent the operation of the market - trade unions,
> industry associations, and government bureaucracies being the main
> examples of such institutions. The result is economic decline.
> Societies that are disrupted by war, invasion and revolution get a
> fresh start unencumbered by the accumulation of such institutions and
> therefore enjoy economic growth much greater than other societoes that
> have not been disrupted.

I saw this paean to laissez faire, as well. Kind of a curious time
to be exhuming that old book, what with the current economic crisis
being caused by bankers running wild after deregulation and captains of
industry, particularly automotive, for 50 years getting labor to go for
cheaper wages by promising pensions in the sky by and by that they knew
they wouldn't have to pay for, but now we do.

<http://www.fivethirtyeight.com/2009/03/gms-problems-are-50-years-in-making.html 
>

In other words, it wasn't trade unions or government bureaucracies that
caused this decline. It was actually the active destruction of  
government
oversight that pitched us over the edge. It's true industry associations
had something to do with that.

As for trade unions, was it Honda or Toyota that about a generation
ago took over a failed GM plant, applied different management, and
with the same trade unions and the same workers, turned it profitable?

If government bureaucracies are so evil, why don't laissez faire
proponents propose doing away with contract law?

Regarding Britain, I always thought taxing its resources trying to
defend Europe alone for several years might have had something to
do with it, especially coming after burning a lot of resources on
WW I not so long before. Maybe the authors should have examined
a correlation between excess militarism and the decline of the
rest of society.

Indeed, China has been disrupted four of five times in the past century.
And did it suddenly start growing economically after each disruption?

Hm, maybe not. So maybe it's not disruption per se that's behind its
growth. It might be a central government that is secure enough that
it is willing to discard its former economic ideology in exchange for
something else that works a bit better. But China is not without
government bureaucracy. China is the country that executes economic
criminals, as for example the four bankers executed for fraud in 2005.

In the west Madoff so far seems to be the only economic criminal
convicted of anything lately. How's that lack of consequences
working out for us?

That book may have been good for its time, but it's a tad out of date  
now.

Regarding the reviewer's recommendations: "The second best thing would
be to move to Alaska or an up-and-coming foreign country and work to
extract some new kind of energy." Alaska, the state that's entirely
on the dole from oil money; right. How about get on with wind, solar,
wave, and ground loop energy stateside, and sell the technology to
other countries, thus getting off of oil and producing something
to export?

Meanwhile, one blog entry by Nate Silver seems to provide more
insight than that book.

-jsq
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