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This is mostly nonsense. 1) The 5% return that produced the $45T figure is significantly higher than the expected return on capital for the vast majority of th
by throwayasdf23 8y ago
This is mostly nonsense.
1) The 5% return that produced the $45T figure is significantly higher than the expected return on capital for the vast majority of that period(which includes risk and is not comparable to modern returns). Furthermore, there would be no place to put that money to try to extract that return. The notion that the 18th century even had a safe positive return on capital for large periods of time for proto-investors is dubious to say the least.
2) The timeline doesn't fit for claiming that colonial India dramatically benefited the imperial center or periphery. The UK was industrializing and ahead of the rest of Europe before revenues from India are supposed to have made a difference yet fell behind countries like Germany(which lacked any colonies until the late 19th century) even as revenues from India were supposedly diverted. The periphery is no better, Canada and Australia fell behind the US even with the supposed surplus from India.
3) I'm skeptical that diverted taxes from a mostly agricultural society like India could have produced the bonanza suggested in this article. Existing Per capita taxes would have been onerous enough and not much more could have been meaningfully extracted from the peasantry. A pre-modern society has enough problems with basic economic management and political stability; sustaining a massive bureaucracy necessary to collect taxes without rents diverted to local elites doesn't make a lot of sense.
4) As an addendum to (3) the early East India Company lacked the ability to even administer the country without the cooperation of elites(which required the dispersal of rents). The later imperial bureaucracy necessary to administer India was by all accounts quite expensive. There just isn't the gigantic return form skimming off taxes that is suggested in the article.
- diffoperator 8y agoWhy did you create a throwaway to post this?
- a11r 8y agoA simple statistic: Before the British showed up, Indian GDP was 15 to 20% of world GDP. When they left its was 1.5 to 3% of world GDP. Something tells me the colonial experience might have something to do with it.
- iguy 8y agoNo this is nonsense. That relative decline was because the pie grew... and grew spectacularly, for the first time in history, for reasons that had next to nothing to do with some colonial adventure.
- porpoisely 8y agoThe pie grew and india was intentionally prevented from partaking in the pie by the british. Ignoring the mass famines and the humanitarian destruction caused by the british empire in india, the greatest damage inflicted on india was its lack of industrialization. Britain simply prevented india from industrializing until they were kicked out in 1947. Britain and the US really industrialized in the mid 1800s ( although britain loves to pretend it did in the 1700s ). Parts of europe followed soon after. Japan industrialized in the late 1800s. India ( and china ) industrialized after ww2 - india much more slowly than china due to its democratic and bureaucratic baggage. For more than 100 years, india was prevented from industrializing by britain. You can't ignore that significant opportunity cost. Also, you are wrong when you say colonial "adventure" had nothing to do with industrialization. Excess capital and excess resources are the prerequisites for national industrialization. British industrialization was funded by opium money from china and resources from india. The need for resources is why japan and germany sought to create empires for themselves. It was a necessity to industrialize. Having said that, I don't think you can honestly calculate the costs of colonization because there are so many factors involved. Would india have been able to follow meiji japan's or even mao's china's example and industrialize? We can say that india lost a lot due to british imperialism, but I doubt we'll ever know exactly how much. At best, it's just a guess.
- graeme 8y agoHow does this argument apply to European countries that had no colonies, such as Switzerland? Japan is a bit of an aberration. It was the only non-western country to industrialize early. Now, India might have done so also, had it somehow avoided industrialization yet maintained contact with industrializing countries. But, a counterpoint to this is that India basically didn't industrialize after independence either. Only when the "License Raj" was done away with several decades later did India start to grow quickly. (In other words, mere absensce of colonization was not sufficient for growth)
- kolbe 8y agore: (1) I don't know why people try to use these crazy discount factors on such long time horizons. I feel like it should be pretty easy. The currency of the time was in precious metals. So, we can just revalue the gold and silver in kilos from 1700 in dollars for 2018.
- gumby 8y agoYou're right there's quite good data on European interest rates and COG data (i.e. inflation proxies) for this period. Still, this enormous number is probably in the ballpark.
- drieddust 8y agoHmm sound like British were their to teach civilization to the noble savages. British went their for cheap raw material, cheap labour, and cannon fodder soldiers.