To non-economics students - think of "Plenty" as the everything that you're now having: a comfortable house/room, a TV set to watch Netherlands vs Uruguay, pocket money from your parents, books to study for exams (does this excite you babe?), and in future, a car to drive around, a nice book like this one to read in your bed, a massage on a trip to Bali - basically, why are you, YES YOU, not planting corns to feed your tummy and sleeping on the mud, like how our less intelligent cousins who talk like GWAK GWAK GWAK?
Bruce Edward has a pretty similar taste for books as me, I realised. "The Black Swan", "The Birth of Plenty" and "Against the Gods" are all good books for people who'd like to exercise their brains a bit during this cold winter. Just like how gym workout makes your body fitter, reading books make your brain fitter - and the activity generates HEAT which - you would agree with me - a precious commodity in July of Australia.
You can safely assume that economics-related BOOKS are nearly always more interesting that economics JOURNAL ARTICLES or TEXTBOOKS. The latter are full of graphs and over-simplified models which no one believes in practice but everyone writes down on exam scripts LOL~
How is "Plenty" born? How does the world start growing the pace it does today? In other words, how did we human start to realise that we can generate much more than what we thought we could. WB puts the source of "growth" in a package that contains:
1. Property rights and Rule of law - ie a set of rules that restrict what you and I can do, but not too much, and a set of rules that give me assurance that my money, ACST notes, Indomee, this blog, my business (when I become a boss one day), my invention (in case I invented some gadgets, models, theories that have a wow factor one day LOL~) would still remain mine tomorrow, next month, next year, ...., if I choose not to sell them to someone else. In other words, if there is no rules to protect my property rights to my ACST notes tomorrow, economic growth might be stunned (to some extent) because XinYin can't study -->just kidding. What's the point of making more money, if the 'king' can take them from me whenever he likes; what's the point of investing in a business if at anytime it can be stripped from me; what is the point of creating something e.g. a gadget, a theory if I can't claim ownership and thus reap rewards out of it?
2. Environment that gives incentive to scientific research and intellectual development - ie there must not be a tight regime which restricts intellectual thinkings of yours and mine. E.g. we should be allowed to tell our lecturers how wrong their models are, and not get a sour face in return.
3. Easy access to capital - ie there must be fairly abundant $$ at affordable interest for you and I to borrow to invest in something we invented. For example, if I want to set up a new instant noodle company to challenge the superpower status of Indomee, I should be able to borrow to employ workers, buy machines, build factories that churn out massive quantities of dried noodle and seasoning full of toxic, so that I could sell them off to university students who are too lazy to cook. Because I set up a rival company, Indomee would feel threatened and do more research on how to improve their toxicating seasoning so that more people would be willing to spend $0.50 on each packet of poisonous monster.
4. Efficient transportation and delivery of goods and ideas - ie I must be able to obtain the things that I don't produce myself, access the knowledge/news/gossips/world cup matches, and fly to Australia from Malaysia in 8 hours, not by boat in 6 months. I must also be able to access the (mostly boring, long, some pretty interesting) academic papers to do my thesis, and to obtain a copy of 'Over Mount Fuji' to understand the ideas that had Joel Huan obsessed for 10 years.
The historical path that eventually led to "the birth of plenty" was rocky, with many emperors rose and fell, countries achieving glories then collapsed. The first sign of economic growth was seen in Holland and Britain - not US the modern superpower. There is an interesting chapter on British Imperialism that explains the economic side of British colonialism in Southeast Asia. Well, the account that I read on History textbooks was all about how humuliating it was to "lose national sovereignty" to whites, about "natural resources that got litched off by whites", and spirits of patriotism that eventually motivated "heroes" that fought for independence.
I dread to think about how Malaysia would look like if there was no British colonial masters. Would the country still be run under a feudalistic system? Would I have the opportunity to study overseas? Would I become a paddy farmer who has to pay >70% tax to the landlord or the king, and sing Dollar Tuanku everyday? I suppose no, because the fact that the country was run feudalistically was the trigger point for western colonialisation i.e. British took advantage of exactly that to topple the local kingdoms and negotiated (forced) the rulers to hand over controls.
For the price of having to call the British "masters", roads and railwork were built, schools were set up, local governments were established, rules and laws were enacted, foreign banks were allowed to set up branches. In some ways, these were exactly what led to the nationalism movements. Who cares about the flag on top of government buildings if there were no educated minds and adequate income to feed the stomachs so that energies can be generated to run the minds?
By the turn of the second half of 20th century, the superpowers - the US and Britain especially - realised that imperialism was poor investment so they retreated. If they didn't, many countries today would still be colonialised.
Of course, it is far easier to explain what happened in the past than to predict what would happen in future. WB is pretty smart, he avoided speculation in 95% of the book and only gave a brief, broad speculation at the end: the growth shall continue, the growth figures are there to stay.
I would guess so, but given how unpredictable future are to human at any point - the Europeans living in the Dark Ages wouldn't imagine how XinYin could type a blog entry while eating porridge, and post it up at whims, he/she simply couldn't understand how XinYin who doesn't know how to loosen up the soil in front of her house could possibly have rice to cook porridge - our guessing in the 10th year of 21st century about the economic landscape of the 22nd, 23rd ...centuries, might just be as inaccurate.
Hang on, maybe we as human have become more intelligent over time and therefore can predict better?
Read this book if you're the kind of person who question what your economics lecturers are/were telling you. (It is a bit thick, though, almost 400 pages, still less than your one-semester lecture notes?). Economists loves to draw "frontiers" - a cool name for really just an ugly line on a paper- to represent the process of economic growth. And I remember there was this line drawn by Alex Blair that intersects some curve so that the magic model gives you "equilibrium" level of output. The possible questions in exam about economic growth are either "change in labour force" or "increase in capital resources" or "technological advancements".
If everything about mankind stays unchanged, growth would of course continue --> a pretty lame assumption, since when human are static? E.g. I won't even know what I would eat tomorrow as lunch, but maybe not porridge. Resources on earth are limited - which is the reason why some economists in the past predicted growth to be "stunned" at some point in the 20th century (and those people were so good at justifying why their predictions didn't come true, retrospectively). If so, how could countries grow forever? Where can we find the extra GDP when the amount of soil and oxygen is essentially fixed? More babies? More financial contracts (which aren't natural resources)? More land exploration?
Or, perhaps, conquer other planets and make them our second home?
P/S: Joel Huan, your book is next.
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