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#64197 - 01 Nov 07 06:55 Global Poverty Trap
riccardo Offline
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This is an op-ed article in The Washington Post.


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The Global Poverty Trap

By Robert J. Samuelson
Wednesday, October 31, 2007; Page A19

It's nature vs. nurture. One of the big debates of our time involves the causes of economic growth. Why is North America richer than South America? Why is Africa poor and Europe wealthy? Is it possible to eliminate global poverty? The World Bank estimates that 2.5 billion people still live on $2 a day or less. On one side are economists who argue that societies can nurture economic growth by adopting sound policies. Not so, say other scholars such as Lawrence Harrison of Tufts University. Culture (a.k.a. "nature") predisposes some societies to rapid growth and others to poverty or meager growth.

Comes now Gregory Clark, an economist who interestingly takes the side of culture. In an important new book, " A Farewell to Alms: A Brief Economic History of the World," Clark suggests that much of the world's remaining poverty is semi-permanent. Modern technology and management are widely available, but many societies can't take advantage because their values and social organization are antagonistic. Prescribing economically sensible policies (open markets, secure property rights, sound money) can't overcome this bedrock resistance.

"There is no simple economic medicine that will guarantee growth, and even complicated economic surgery offers no clear prospect of relief for societies afflicted with poverty," he writes. Various forms of foreign assistance "may disappear into the pockets of Western consultants and the corrupt rulers of these societies." Because some societies encourage growth and some don't, the gap between the richest nations and the poorest is actually greater today (50 to 1) than in 1800 (4 to 1), Clark estimates.

All this disputes the notion that relentless globalization will inevitably defeat global poverty. 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, which produced Judaism, Christianity and Islam; or the invention of the printing press around 1450, which spread knowledge; or the American Revolution, which promoted democracy.

Before 1800, says Clark, most societies were stagnant. With some exceptions, people lived no better than their ancestors in the Stone Age. Economic growth was virtually nonexistent. Then England broke the pattern, as textile, iron and food production increased dramatically. Since 1800, English income per person has risen by a factor of 10. Much of Europe and the United States followed.

Almost everything that differentiates the modern era from the preceding millennia dates from this point: the virtual end of hunger in advanced societies; the expectation that living standards will constantly rise; the creation of the welfare state to redistribute income; the destructiveness of contemporary warfare; industry's environmental spoilage. But why did the Industrial Revolution start in England?

It's Clark's answer that convinces him of the supremacy of culture in explaining economic growth. Traditional theories have emphasized the importance of the Scientific Revolution and England's favorable climate: political stability, low taxes, open markets. Clark retorts that both China and Japan around 1800 were about as technically advanced as Europe, had stable societies, open markets and low taxes. But their industrial revolutions came later.

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. He rejects the well-known theory of German sociologist Max Weber (1864-1920) that Protestantism fostered these values.

Clark's theory is controversial and, at best, needs to be qualified. Scholars do not universally accept his explanation of the Industrial Revolution. More important, China's recent, astonishing expansion (a fact that he barely mentions) demonstrates that economic policies and institutions matter. Bad policies and institutions can suppress growth in a willing population; better policies can release it. All poverty is not preordained. Still, Clark's broader point seems incontestable: Culture counts.

Capitalism in its many variants has been shown, he notes, to be a prodigious generator of wealth. But it will not spring forth magically from a few big industrial projects or cookie-cutter policies imposed by outside experts. It's culture that nourishes productive policies and behavior.

By and large, nations have either lifted themselves or have stayed down. Societies dominated by tribal, religious, ideological or political values that disparage the qualities needed for broad-based growth will not get growth. Economic success requires a tolerance for change and inequality, some minimum level of trust -- an essential for much commerce -- and risk-taking. There are many plausible combinations of government and market power; but without the proper cultural catalysts, all face long odds.
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#64199 - 01 Nov 07 06:59 Re: Global Poverty Trap [Re: riccardo]
riccardo Offline
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This is exactly the kind of discourse my fellow students and instructors were having back in university in the 1980s and similar opinions were then, as now, considered the "conventional wisdom".

But after having lived/worked in a dozen impoverished countries for the past two decades, my opinion on it has changed 180 degrees.

It's now clear to me that the fault lies almost entirely on the leaders and elite members of each poor country. At some point in the histories of each of the rich nations, the leaders realized they had to spread the wealth to the people, but in morally corrupt countries like Indonesia or Nigeria or Bolivia, the leaders are too selfish and greedy and just don't get that part. And the local people are too cowed to defy them.

It may take them several more generations of human development (evolution?) to get them to understand these things well enough to actually implement programs to re-distribute wealth and require good governance.
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#64200 - 01 Nov 07 07:02 Re: Global Poverty Trap [Re: riccardo]
chewwyUK Offline
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Anybody considering the re-distribution of wealth please feel free to contact me.
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#64205 - 01 Nov 07 07:11 Re: Global Poverty Trap [Re: riccardo]
KuKuKaChu Moderator Offline
Pooh Bah

Registered: 09 Oct 05
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Quoting: riccardo
Modern technology and management are widely available, but many societies can't take advantage because their values and social organization are antagonistic. Prescribing economically sensible policies (open markets, secure property rights, sound money) can't overcome this bedrock resistance.

i have always maintained that economic and social development is in large part a *choice*, not something that is necessarily always denied by one group to another.

cultures that choose not to adapt to the global capitalist system will not gain benefit from that system. societies that reject the values of global capitalism will also deny themselves entry into what we currently call development.

cultures and societies have choices, and many cultures around the world choose not to become part of the global capitalist culture.
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#64206 - 01 Nov 07 07:13 Re: Global Poverty Trap [Re: KuKuKaChu]
chewwyUK Offline
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I smell a communist
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#64207 - 01 Nov 07 07:16 Re: Global Poverty Trap [Re: chewwyUK]
KuKuKaChu Moderator Offline
Pooh Bah

Registered: 09 Oct 05
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Loc: Centre of the Universe
a communist with capitalist values wink
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#64208 - 01 Nov 07 07:18 Re: Global Poverty Trap [Re: chewwyUK]
Dilli Offline
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The only comment that I have with the article in general is that Clark was talking out of his arse when he referred only to England.

Much of the "technology" which made the Industrial revolution occur was developed in Scotland.
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#64209 - 01 Nov 07 07:25 Re: Global Poverty Trap [Re: Dilli]
chewwyUK Offline
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Registered: 14 Sep 06
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England conquered Scotland .. ergo ...English technology
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#64210 - 01 Nov 07 07:31 Re: Global Poverty Trap [Re: chewwyUK]
KuKuKaChu Moderator Offline
Pooh Bah

Registered: 09 Oct 05
Posts: 10790
Loc: Centre of the Universe
scotland was also a good place to locate polluting industries.
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#64230 - 01 Nov 07 09:35 Re: Global Poverty Trap [Re: KuKuKaChu]
riccardo Offline
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So what's the solution?
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#64233 - 01 Nov 07 09:47 Re: Global Poverty Trap [Re: riccardo]
chewwyUK Offline
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Registered: 14 Sep 06
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Revolution my friend! Thats the answer .. when the people can't take living in shit anymore while their "government" gets richer and richer they will eventually take to the street and burn down anybody in their way until things change. While it seems a little extreme it is the only way their government will change their attitude. Clearly throwing more and more money at there countries isn't working ... the change must come from the people.
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#64234 - 01 Nov 07 09:59 Re: Global Poverty Trap [Re: riccardo]
KuKuKaChu Moderator Offline
Pooh Bah

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Quoting: riccardo
So what's the solution?

is there a problem? if peoples choose not to become part of the dominant global economic system/culture, they cannot be forced.
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#64235 - 01 Nov 07 10:07 Re: Global Poverty Trap [Re: KuKuKaChu]
riccardo Offline
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Registered: 12 Oct 05
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I don't think the 40 million children in Indonesia who are living in dire poverty and are badly undernourished (many are chronically malnourished) have the capacity to even understand those choices. At some point, people with that capacity need to make the choice ON BEHALF OF THEM to do what is necessary to feed them.
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#64238 - 01 Nov 07 10:12 Re: Global Poverty Trap [Re: riccardo]
KuKuKaChu Moderator Offline
Pooh Bah

Registered: 09 Oct 05
Posts: 10790
Loc: Centre of the Universe
you mean, like missionaries?
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#64243 - 01 Nov 07 10:39 Re: Global Poverty Trap [Re: KuKuKaChu]
Dilli Offline
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Registered: 26 Feb 06
Posts: 8044
Loc: Nearest Bar
Assumes the position!
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