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A new
book about world economic development is causing a
controversy among those interested in the subject. It
has not yet been discussed in the local press, but if
you want some insights into the Philippines, you might
want to get it. The book is A Farewell to Alms: A
Brief Economic History of the World by Gregory
Clark.
There is
a great debate among historical economists as to those
factors that differentiate one nation’s progress from
another. I myself have written on the subject in the
past, wondering whether or not economics is a cultural
phenomenon.
Rich
natural resources, political stability, “business”
environment and culture are all part of the equation of
economic growth and development. Clark takes the side of
culture, a subject talked about quite a bit with regard
to the Philippines, the “350 years in a monastery, 50
years in Hollywood and learned to cook Chinese-style”
type of thinking.
Quoting
from a review in the Washington Post by Robert J.
Samuelson, let me share some economic facts. “The World
Bank estimates that 2.5 billion people still live on $2
a day or less.” That is a staggering number, considering
the overall global wealth that has been created in the
last 200 years since the beginning of the Industrial
Revolution.
But that
wealth is unequally distributed as “the gap between the
richest nations and the poorest is actually greater
today [50 to 1] than in 1800 [4 to 1].” Clark questions,
for example “Why is North America richer than South
America? Why is Africa poor and Europe wealthy?”
The
world was little changed economically from the Stone Age
until the 1800s. From the book: the quality of life also
failed to improve on any other observable dimension.
Life expectancy was no higher in 1800 than for
hunter-gatherers: 30 to 35 years. Stature, a measure
both of the quality of diet and of children’s exposure
to disease, was higher in the Stone Age than in 1800.
Thus, the average person in the world of 1800 was no
better off than the average person of 100,000 BC.
Indeed, in 1800, the bulk of the world population was
poorer than their remote ancestors.”
What
changed the world for the better was the Industrial
Revolution that began in England. From Samuelson: “To
Clark, who teaches at the University of California at
Davis, history’s most important event was the Industrial
Revolution, more important than the emergence of
monotheism; or the invention of the printing press
around 1450, which spread knowledge; or the American
Revolution, which promoted democracy. Since 1800,
English income per person has risen by a factor of 10.
Much of Europe and the United States followed.”
Some
factors that led to this revolution were “technology,
political stability, low taxes, open markets.” However,
both China and Japan had equal qualities to England at
that time,yet their industrial age began much later.
What made England the birthplace, and why have other
countries since that time economically lagged behind?
What
distinguished England, he says, was the widespread
emergence of middle-class values of “patience, hard
work, ingenuity, innovativeness, education” that favored
economic growth. After examining birth and death
records, he concludes that in England, unlike many other
societies, the most successful men had more surviving
children than the less fortunate. Slowly, the attributes
of success that children learned from parents became
part of the common culture. Biology drove economics. In
other words, more children from the stronger economic
classes with stronger work ethics makes a nation’s
economy develop faster. “The samurai in Japan in the
Tokugawa era [1603–1868], were ex-warriors given ample
hereditary revenues. Despite their wealth, they produced
on average little more than one son per father.” Same
for the Chinese: “The Qing imperial lineage was the
royal family of China from 1644 to 1911. They, too, were
wealthy through the entitlements that fell to persons of
their status. They produced more children than the
average Chinese, but only modestly so.”
It is
not the number of children a society produces but the
number of children that carry a strong work ethic, and
work ethic seems to be the determining factor even in
the 21st century. “A detailed examination of the cotton
industry, one of the few found from the earliest years
in both rich and poor countries, shows that the anatomy
of the great divergence is complex and unexpected, and
again hard to reconcile with economists’ favorite
explanations, bad institutions, bad equilibrium and bad
development paths. In fact, workers in poorly performing
economies simply supply very little actual labor input
on the job. Workers in modern cotton textile factories
in India, for example, are actually working for as
little as 15 minutes of each hour they are at the
workplace.”
Ultimately, it comes down to the simplest economic
principle ever created: No work, no eat. And the more
productive an individual or a nation is, the wealthier
they become.
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