Posted on 02/15/2013 8:29:27 AM PST by SeekAndFind
Economists have been talking for decades about why some countries get wealthy, and some do not. It was the subject of Adam Smith’s famous book, The Inquiry Into the Nature and Causes of the Wealth of Nations. I suggest that the secret could be expressed in four words: Low Taxes, Stable Money. I call this the Magic Formula.
The reason for this is simple. The primary way that countries have become wealthy is via capitalism. Capitalism works best with stable money and low taxes.
If taxes are too high, and money is too unstable, capitalism – the incredibly complex arrangement of relationships that allow humans to cooperate together in vast networks of investment, production and trade, via the market system – becomes impaired, or collapses completely.
Recent books like Why Nations Fail, by Daron Acemoglu and James Robinson, take up this fascinating subject for our own age. In general, they tend to focus on a menagerie of what I would call secondary factors, while missing the foundational importance of the Magic Formula.
If you don’t have the Magic Formula, you might maintain a decent standard of living. Many European countries maintain a high standard of living today, despite rather high taxes. But, they didn’t become wealthy this way. If you look back into the history of Germany or Japan, or the United States, you typically find a period when the Magic Formula is in full effect. Most of the gains are made during these eras.
In U.S. history, most of the gains were made in the 1870-1914 period, the 1920s, and the 1950-1970 period. Today, we have neither Stable Money nor Low Taxes. The result? The U.S. median male full-time wage has stagnated and declined for forty years.
(Excerpt) Read more at forbes.com ...
Singapore and Hong Kong were economic centers built up to manage the trade of real wealth created in Asia and Europe.
So Singapore and Hong Kong are poor? Learn a new thing every day.
I would add five more, “The Right to Own Property”. That is a big reason why the Kelo decision worries me.
Hong Kong really came into its own in the 19th Century as the distribution hub of opium provided by the Sassoon family and the British Empire. Opium comes out of the ground and opium addicts need it everyday. Its creates some much wealth that the British Empire went to war against China three times to force it upon the Chinese people.
Get real. They’ve been getting a slice of the wealth that they trade for hundreds of years.
Three more works better: Rule of Law. That incorporates property rights but includes respect for and enforcement of contracts and liabilities.
I think you missed Heinlein’s point. He is *not* saying you need an expensive education to be productive. Edison dropped out of school in the second grade, yet he invented the phonograph, moving pictures and the electric light bulb. Even in purely academic pursuits, Einstein had problems graduating from college (due to his personality, not his intellect) and failed to get an academic appointment after graduation. He was working as a patent examiner, second class, in 1905 when he wrote four of the most influential papers ever by any scientist.
Singapore and Hong Kong are blessed with remarkably productive populations.
Giverments have NOTHING except what they steal from the people..
The level of theft is the problem...
This is true of ALL givernments, all of them.. no matter system..
What givernments and its officials HAVE is totally STOLEN..
Why it is easy to become rich as a politician..
ONLY one system ever devised by man to LIMIT the theft..
Thats the USA.. Constitutional system... not stop it but limit it..
You do know, the entire reason for a US Constitution was to LIMIT federal givernment.. NOT ENHANCE IT..
No doubt about it. They also don't have a government undermining them at every turn or shipping their jobs to a foreign country.
According to Wikipedia: "The tax level in Norway is among the highest in the world". Yet their per capita GDP is higher than that of the US.
We are blessed with the government we elected. We have no one to blame but ourselves.
If more Americans shared my voting preferences, America would be far, far more prosperous. American voting preferences, unfortunately, are becoming indistinguishable from Venezuela’s.
Here are the scores for both Singapore and the United States in Heritage's Index of Economic Freedom:
Singapore,Where does it look like the United States needs to improve?
United States.
I think that the sound money of states is corruption and regulation. Keep both low and you’ve got a winner.
They want us poor! Poor people are easier to control. They've rigged the whole system to make it difficult to create wealth here. They didn't eliminate the creation of wealth they moved it overseas so we can not benefit from it. They had to move it. Even under the most burdensome regulation and crushing taxes the process of wealth creation would still remain here and the American people, hardworking and resilient, would still thrive.
Regulations and Taxes are easy to fix, you just sign a piece of paper, but physically destroying or moving our industrial infrastructure and giving away the technology is irreversible. The consequences are catastrophic and not something we can ever recover from. The men that deliberately did that with malice and forethought ruined this country for generations. They are the worst kind of traitors and should be dealt with as such.
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