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I am not an economist, but thinking about this briefly .. could it be, the west needs to suffer economically for developing parts of the world to prosper? Are
by lwhi 15y ago
I am not an economist, but thinking about this briefly .. could it be, the west needs to suffer economically for developing parts of the world to prosper? Are finite economics still relevant in the 21st century?
- davidw 15y agoNo. The economy is, by and large, not a zero sum game. Otherwise, why are N billion people by and large better off than however many people there were 200 years ago?
- lwhi 15y agoI see your point, but then isn't wealth always relative? If scarcity isn't used as a yard stick for money creation how can inflation be avoided?
- davidw 15y agoHaving enough to eat is having enough to eat: it doesn't matter if someone else eats in a fancy restaurant. Edit: status is relative - if everyone else has a Ferrari, and I only have a Fiat, I probably feel poorer. However, I still have a car that is better, faster, and safer than anything that existed 100 years ago. Edit#2: the above is one reason that worrying about what you have in an objective sense is a lot healthier than worrying about status/relative wealth.
- nickik 15y agoNo wealth is not relative. If you have nothing you have nothing thats the baseline. I think what you mean is that it is hard to measure how healthy somebody is, thats why we use money to meausre wealth, with money you get choise and if you can choose you can take what makes you the happiest. This line of reasoning is flawed but its the best weath got. If you we find out that choise make you unhappy then we have a problem and I don't know how to solve it.
- roel_v 15y agoI don't understand your question? No, wealth isn't always relative (it's debatable but not so interesting if it's ever relative) - an 'average' farmer in the 1800's (in Europe) had a vastly worse lifestyle than an 'average' farmer today. Today, he is more wealthy in absolute terms. If you and I can each grow 100kg of wheat and 2 pigs per year when we work solitary, but if you can grow 400 kg and I can grow 4 pigs if we specialize and trade wheat for pigs, then we are both objectively more wealthy in the second scenario. Why would you want to avoid inflation? Money is only a measure for wealth at one point in time, for the rest it's just a tool to provide liquidity and efficiency to markets. What do you mean by 'scarcity being used as a yard stick for money creation'?
- lwhi 15y agoI mean the wealth of one person in 1800, is relative to the wealth of another person in 1800. Likewise for today. So perhaps comparing the wealth of people in 1800 to today isn't actually that productive, because the baseline has increased? I think maybe my view of economics is flawed. My basic premise was that traditionally cost has traditionally been defined by scarcity of an item / service and consumer demand. In which case there's no limit to scarcity (say through sale of IP) how can the system work without bubbles developing / the economic system breaking down? Likewise how can everyone be wealthy when wealth is measured relatively? (i.e. how wealthy you are is defined by how wealthy your neighbour is). I think I need to read a bit about economics in general. EDIT: prosperity -> wealth.
- roel_v 15y agoThat's why I included the example of the wheat and the pig - there is no time component there. It shows that there can be various levels of wealth even at the same point in time, and that wealth is not zero sum, i.e. it's not necessarily true that for person A to get more wealthy, person B has to become less wealthy. They can both become more (or less) wealthy). How do you conclude that a good with unlimited supply (which is I suppose what you mean by 'no limit to scarcity') would lead to bubbles or economic breakdown? It just means that in theory in a system with perfect substitutes for these goods, the cost would gravitate towards production cost. The whole point is that prosperity isn't measured relatively. (well you could, but it doesn't make much sense in most cases). Prosperity is quality of life. Would my life be better if my neighbor doesn't have money to take his daughter to a doctor but I do? Only if I was a sociopath, which the majority of us aren't. When the tide rises, all boats go up. And yes there is evidence that in the margin, our feeling of well-being increases when we are higher on the social ladder, but that's a separate issue; "prosperity" and "feeling of well-being" are related but not the same.
- _delirium 15y agoThere appear to be some non-infinite limits on some components of standard of living, though. For example, if you extrapolate the resources Americans and Western Europeans use per capita (water, electricity, oil, etc.) to the entire world's population, you at the very least have some serious technological challenges to avoid hitting limits. If technology isn't able to keep up fast enough, it could introduce a bit of a zero-sum element, where a wealthier developing world would put downward pressure on the developed world's standard of living, in that the amount of resources available to an average American might decrease faster than can be offset by technological improvements. That's some of the current worry with oil, that increased consumption by China et al will mean that oil is more expensive in real terms, and alternatives won't appear fast enough, meaning that Americans' overall standard of living will decrease, as they're forced to either make do with less oil (and stuff oil is an input to), or forego other luxuries to pay for the oil (and indirect-oil). Past poverty levels, "wealth" becomes much more relative in that it involves wages, imo: a measure of whether you're "well off" is whether you can afford to pay people to do things for you, whether it's clean your house, serve you in a restaurant, tend to your cruise ship, design your website, or work for your company. That definitely depends on relative rather than absolute numbers, with a bigger differential meaning that you can buy more hours of other people's time.
- hythloday 15y agoFor example, if you extrapolate the resources Americans and Western Europeans use per capita (water, electricity, oil, etc.) to the entire world's population, you at the very least have some serious technological challenges to avoid hitting limits. I'm almost certain this is going to come off more Whiggish than I intend it to, but do you believe this was true in 1912/1812/1512/12AD? I'd be willing to bet it was. In fact, I think I'd go further and be willing to guess that the further you go back, the more inconceivable equality of resource use becomes (again without the explicit implication this is an unbreakable line upwards).
- kamaal 15y agoWell England wasn't a very rich country before 'Sun never sets on the British empire' era. And they aren't a very rich country now, after they lost all their colonies. I don't wish to be harsh here, but how much of west's wealth is their own hard earned through their sweat is a question to ask.
- Lazare 15y agoYou realize you're talking about the 20th wealthiest country in the world? And most of the countries above them are either tiny, have oil, or both?
- berntb 15y agoIt seems to me the GP didn't talk about the relative wealth of e.g. Britain, he was expressing a conspiracy theory that everything Britain had was stolen? It took me a bit to realise that you did answer the GP's "point".
- weavejester 15y agoIn terms of GDP, the United Kingdom is still the 6th or 7th richest in the world. That's still pretty rich. There are also a lot of wealthy European countries that had a minimal presence abroad in the 19th century. There doesn't appear to any correlation between the modern wealth of western countries and their past colonialist ambitions.
- hythloday 15y agoThe UK is ~20th on GDP per capita, which is probably a better proxy for "standard of living" than GDP per nation.
- weavejester 15y agoAgreed, but the original poster didn't mention standard of living, only how "rich" the country was. That sounded more like overall GDP than GDP per capita to me (saying "Luxembourg is richer than the USA" sounds a little wrong, right?), though it admittedly it was just a guess as to what he or she meant.
- scythe 15y ago>could it be, the west needs to suffer economically for developing parts of the world to prosper? Very, very unlikely. The most relevant example of a modern fall from economic grace is the descent of Argentina, from the seventh-richest country in the world in 1900 to somewhere around 50th today. However, if anything, this had a large negative effect on the economy of South America (which stagnated as Argentina fell), and the modern economic rise of Chile and Brazil seems to be helping the countries surrounding them, or, in essence, prosperity is contagious, rather than conserved.