Posted on 01/30/2008 1:50:21 PM PST by FewsOrange
Should we worry that the people of China, India and other undeveloped countries are getting richer? Apparently so, according to the newspapers and the "experts" they quote. They don't come right out and say that global prosperity is bad for us. Instead they say, as The New York Times recently said, "As development rolls across once-destitute countries at a breakneck pace, lifting billions out of poverty, demand for food, metals and fuel is red-hot, and suppliers are struggling to meet it. Prices are spiraling, and Americans find themselves in what amounts to a bidding war with overseas buyers for products as diverse as milk and gasoline [http://tinyurl.com/2m6m8n]."
It is certainly true that China's economy is expanding dramatically -- 10 percent last year. The Chinese build factories like crazy to pump out the inexpensive exports we Americans love to buy. To do that, Chinese producers have to purchase oil, steel and lots of other commodities. The new demand drives prices up.
And as the Chinese and other people get richer, they improve their diets and eat more meat, putting pressure on world food prices.
So media handwringers suggest we should worry about the poor becoming rich.
Actually, we shouldn't. It would be a sad world if one person's economic success depended on another's failure?
More of us would understand this if we learned what the great economics writer Henry Hazlitt preached in his classic book, "Economics in One Lesson": "The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy."
In the short run, richer Chinese and Indians bid up the prices of things. But that's just the beginning of the story. Increased demand and higher prices create opportunities for entrepreneurs.
When the price of, say, oil goes up, entrepreneurs and inventors have a strong incentive to: 1) find more, 2) find alternatives, and 3) find ways to use oil more efficiently. You and I cannot foresee what they will invent, but that means nothing. Predictions about the end of progress have been issued countless times. There is no reason to think they will be right this time.
Assuming government stays out of the way. Our current "leaders" are full of promises about "protecting" workers and industries, creating new "green" industries, and starting worker-retraining programs. For example, Hillary Clinton promises government support for "research (to) stimulate the development of new technologies and life-saving medicines [http://tinyurl.com/37zo3s]." Mitt Romney wants "to initiate a bold, far-reaching research initiative -- an Energy Revolution, if you will. It will be our generation's equivalent of the Manhattan Project or the mission to the moon [http://tinyurl.com/3a92ut]."
The media lap it up, apparently believing that no one will produce unless our wise leaders create an inducement. Nonsense.
The market would deliver the goods if government doesn't impose crippling regulations and tax away everyone's capital to fund its coercive utopian schemes. I like what Henry David Thoreau once said: "This government never furthered any enterprise but by the alacrity with which it got out of the way."
George Mason University economist Alexander Tabarrok has another way to demonstrate the benefits of spreading prosperity. Tabarrok wrote in Forbes [http://tinyurl.com/32hqw3] recently that the bigger the market, the more worthwhile it is for companies to make products that require costly research and development, such as medicines and chemicals. As the Chinese and Indians become more able to buy things, businesses everywhere will find it profitable to make products that yesterday weren't profitable enough. The result will be cures for diseases and other products that make our lives better.
Tabarrok takes this a step further: "Amazingly, there are only about 6 million scientists and engineers in the entire world, nearly a quarter of whom are in the U.S. Poverty means that millions of potentially world-class scientists today spend their lives trying to eke out a subsistence living, rather than leading mankind's charge into the future. But if the world as a whole were as wealthy as the U.S. and were devoting the same share of population to research and development, there would be more than five times as many scientists and engineers worldwide."
When it comes to being wealthy, the more the merrier.
China has had nukes since 1963. Kind of silly to worry at this late date when China can assemble a couple nuke warheads a day if they want to, and could even before they went quasi-capitalist.
Thanks for the follow-up.
All very nice, but China is planning to kill us.
The reality is, this planet has the ability to comfortably support 100 billion people with a first world standard of living. Period. And last I checked, there is 7 billion people on the planet.
What occurs, is that as countries grow faster than existing resources can acquire from the earth, whether it be crude oil or soybeans, prices will go up. So, there maybe a time when growth will temporarily subside and production begins to meet demand and prices will drop. And of course, it'll start all over again. This will continue to ebb and flow until countries like China, India, Russia, etc. catch up with the developed nations. Americans, in the future, need not worry about not being able to drive thier 3/4 ton Suburbans. If they aren't able to, it will be because environmentalist will, with federal help, intervene.
We should all look forward to the day when all the world achieves a first world standard of living instead of dreading the day when the US or the West no longer towers above everyone else.
Talking with members of the CCP in China, and factory owners who are Taiwanese, pretty much everyone agrees that ultimately Taiwan will reunite with China, in much the same way that Hong Kong did.
And the Chinese will keep their hands off of it, just like they’re doing with HK - they’re not going to touch the golden goose that drives their economy! Most of the industrialization in the Ningbo and Xiamen areas is from Taiwanese companies.
Taiwan and China are so inter-depedent on each other in terms of trade, that there really won’t be a shot fired - it’ll be a merger when it’s suitable to both sides. Until then, politicians on both sides will rattle sabers and issue proclamations because, well, that’s what politicians do...
You should travel to China, talk with the common citizens. They’re chafing mighty hard, and most are starting to agitate for greater autonomy.
HK, Macau, and a dozen free enterprise zones along the East Coast of China have led the country in terms of economic prosperity. Now those who have benefitted from the economy are agitating for more freedoms. Direct elections of mayors and governors. Even multiple parties running for the Congress.
China’s revolution to freedom will come BECAUSE of its growing prosperity. We couldn’t break their economy like we did the USSR - in the 80s they were still an agrarian society. The approaches used against the USSR would never work - how do you make the life of your typical peasant working a rice paddy any worse?
But now the majority of Chinese have tasted economic success, and with it want all things Western, including personal and political freedom. Using the policies we used towards the USSR will certainly now hurt China, but also hurt us AND the rest of the world, and cause a significant slow-down in the liberalization and Westernization of China.
No, China will move from communism towards a social government akin to that of Finland or Sweden BECAUSE of the internal demands from its citizens. They’ve tasted freedom in one area (economic) and are now pushing for it in the other areas of their lives.
It would be quite ironic if the Chinese solve the oil problem by perfecting ionic/plasma power plants, burning trash for power, since they aren’t hindered by environmentalists screaming “not in my backyard”. Solve the trash and power problem at once.
Or the Indians, via IIT.
Interesting factoids:
If you took EVERY SINGLE PERSON on the face of the Earth, and moved them to the land mass inside of Texas, we’d have no more density than the entire city of New York (all borroughs, not just Manhattan).
The rest of the US’ current farmland, and that of Alberta could feed all people. No need to convert a SINGLE ACRE of park, city, mountain, forest or non-farm space to farming.
And the water outflow of the Columbia River would provide enough fresh water for everyone multiple times over.
We could leave the rest of Canada, Alaska, everything from Mexico down to Tierra del Fuego, and the other continents and oceans completely untouched and empty.
The problem with the Earth isn’t its ability to sustain us; the problem is the distribution of the resources! We grow more than enough wheat and corn, heck we pay farmers not to grow it. If that could be grown, and sold on the open market then there wouldn’t be starvation.
But because some petty dictator (or crazy Frenchman, in the case of France) wants to protect their own “farmers” they ban the importation of our foodstuffs either outright or via use of tariffs to make it economically unfeasible.
Or, they watch them go to ILLEGAL immigrants...
As long as CEOs and shareholders can make more money, then everything is fine.
And they just might get their Keating Five boy to bail out the subprime lending and mortgage mess!
But it may not even be necessary for them to help solve that for awhile. There is still alot of oil out there. The 30-40 year reserves is based on only getting 35% out. They could help with figuring out how to get the other 65%. And that's just with the known reserves. They could help out in oil exploration.
I remember back in the 70's, people were talking about running out of oil. But the reserves are greater today than they were then.
And I'm only talking about the the traditional way we think of getting oil. There are other ways to get oil out. The Tar sands in Canada is one other way and I believe I read just there alone is equal to all the known oil reserves.
Yep, you are right about that. And people in New York, though they may not all have a 10 acre spread, live quite comfortably.
But because some petty dictator (or crazy Frenchman, in the case of France) wants to protect their own farmers they ban the importation of our foodstuffs either outright or via use of tariffs to make it economically unfeasible.
Yes, it is man that creates the problem of distribution and production. I remember reading somewhere, where a farmer in Iowa could yield 10-20 times more bushels of corn (or maybe it was wheat) than people in the third world. Many governments throughout the world, for one reason or another do not have the forsight to seek out help or knowledge to increase the yield. And this was mid 90's that I read that. Agriculture methods are not guarded secrets, it is man that sabotage.
There are labs across the world that is always trying to increase the yields for grains products and new technology could have increased it even more by now.
And, politics gets in the way too. Japan is a good example. Japanese rice farmers could grow more rice, but they protect their farmers. The reality is, if they open their markets up to imports, alot of rice farmers will fold. But then what'll happen is that those fields are still there, they'll just consolidate and they could invest in better equipment and methods and yeild more per acre.
Alot of things we hear or read about tend to be very one sided and does not explain the whole story. For example, some historians fret about the lost of bison on the great plains. Roughly 60 million. But those plains have more hoofed animals on them than ever before. There are probably 600 million heads of cattle on them. And if the American diet or preference where to ever change to bison instead of beef, I'm sure, over the course of a couple decades, there could be 600 million bison back on the great plains.
Yeah, a really principled guy . . . I should try to find out why he would vote in favor of a free trade agreement with Oman. Probably some employer in his district.
He voted in favor of free trade with Oman to try and help U.S. relations in the Middle East. If we are going to keep troops in the region, it would be nice to have as many “friends” as possible.
Also, I’m sure the environment in Oman are such that businesses save billions in manpower simply by relocating there.
If China were free, I would be applauding as I do for India. Instead they are steling our intellectual property and America companies are subsidiezed by both government to go to the repressive regime.
It makes no sense to support a FTA with Oman because it improves relations with an ally and then not support a FTA with, say, Costa Rica (another ally) because it will “cost jobs.”
I must have missed it when Communist China became a beacon for Liberty.
The US worker’s standard of living does not need to sink for Indian and Chinese worker’s standard of living to improve — economics is not a zero sum game.
You could not be more correct and with the right policies no one should suffer only gain .
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