Matt Ridley has an excellent piece in The Times which I have reproduced below:
Weighed down by bureaucracy and suspicion of science, we seem determined to turn relative into absolute decline
A “rational optimist” like me thinks the world will go on getting better for most people at a record rate, not because I have a temperamental or ideological bent to good cheer but because of the data. Poverty, hunger, population growth rates, inequality, and mortality from violence, disease and weather — all continue to plummet on a global scale.
But a global optimist can still be a regional pessimist. When asked what I am pessimistic about, I usually reply: bureaucracy and superstition. Using those two tools, we Europeans seem intent on making our future as bad as we can. Like mandarins at the court of the Ming emperors or viziers at the court of Abbasid caliphs, our masters seem determined to turn relative into absolute decline. It is entirely possible that ten years from now the world as a whole will be 50 per cent richer, but Europeans will be 50 per cent poorer.
Not that the world economy is a zero-sum game. It is a good thing if Africans and Latin Americans join Asians in getting richer at breakneck pace, as many now seem to be doing, even if we don’t join in: not only because want and misery are bad whoever they happen to, but also because if others grow productive and inventive they can supply us with valuable goods and services. Why should the development of new antibiotics or thorium nuclear power remain a burden exclusively on the shoulders of Western taxpayers?
Even so, relative decline can be painful. Spanish people are richer and live longer than when their silver-sated conquistador ancestors strutted the European stage, but I am sure it does not feel like it to an unemployed youth in Bilbao. Whatever happens, we Europeans will probably have to get used to watching Asians book the best restaurants and launch the biggest aircraft carriers in the years ahead.
Absolute decline is far more scary. If Europe cannot rediscover how to grow its economy, then it will have to default on its vast debts, either directly or by inflation. Either way savers will be poorer, tax receipts will be lower and spending on schools and hospitals and roads will be lower: genuine austerity.
As the MP Douglas Carswell reminds us in his book The End of Politics, here in Britain we have public and private debts that are five times our annual economic output; we are spending £46 out of every £100 we earn to buy government — a product that, unlike most, delivers less output for more cost each year. As the Ming empire found out, the more government you buy, the less economic activity you get. A Fujian travelling salesman in 1400 was enmeshed in such a tangled bureaucracy that he could neither travel nor sell without bribes and permits, and he had to submit a monthly inventory of his stocks to the emperor.
Sound familiar? Every small businessman I talk to these days has a horror story to tell about the delays and costs that have been visited upon him by planners, inspectors, officials and consultees. Using the excuse of “cuts”, the bureaucracy is taking even longer to make decisions than five years ago. In the time it has taken Britain’s Government to decide whether to allow a fifth exploratory shale gas well to be drilled in Lancashire, and from the same standing start, the same investors have drilled 72 producing wells in Argentina. That the country of Watt and Stephenson should look a potential cheap-energy gift horse in the mouth in this way is staggering to this jaded optimist.
From ancient Egypt to modern North Korea, always and everywhere, economic planning and control have caused stagnation; from ancient Phoenicia to modern Vietnam, economic liberation has caused prosperity. In the 1960s, Sir John Cowperthwaite, the financial secretary of Hong Kong, refused all instruction from his LSE-schooled masters in London to plan, regulate and manage the economy of his poor and refugee-overwhelmed island. Set merchants free to do what merchants can, was his philosophy. Today Hong Kong has higher per capita income than Britain.
In July 1948 Ludwig Erhard, director of West Germany’s economic council, abolished food rationing and ended all price controls on his own initiative. General Lucius Clay, military governor of the US zone, called him and said: “My advisers tell me what you have done is a terrible mistake. What do you say to that?” Erhard replied: “Herr General, pay no attention to them! My advisers tell me the same thing.” The German economic miracle was born that day; Britain kept rationing for six more years. Where are Europe’s Cowperthwaites and Erhards today?
A growth-preventing bureaucracy is not the only thing suppressing enterprise in Europe. Superstition is also playing a part, as it has done in past episodes of economic decline. The great flowering of Arab prosperity and culture under the Abbasids was brought to an end with the burning of books, the shutting down of inquiry and a mistrust of novelty.
Again there are echoes. Many of the ideas that led to the genetic modification of plants — which has boosted yields, cut insecticide use, saved fuel and soil, and helped the poorest farmers — were pioneered in this country. Yet today there is almost none of this work done in Britain and none of its boons are permitted to farmers and their customers. The labs are ghostly quiet. Why? Entirely because of neophobic superstition that has animated reactionary elites into opposing change on the basis of myths peddled by green mystics. (The biggest superstition of all is surely the worship of the euro: the sacrifice of growth, youth and truth at the altar of a mere currency.) By contrast, America, for all its fiscal incontinence, is still friendly to enterprise and open to novelty, as any time spent in Silicon Valley will prove. To avoid the fate of Ming China Europe needs to rediscover economic rationality.
And yet Australia is taking all its socio-economic cues from Europe, while paying lip service to the “Asian Century”. We are hang-wringing our way to our 21st century status as the poor white trash of Asia.
Tom
4 Jan 13 at 9:36 am
Dunno Tom.
Imperfect though GDP is…..
NSW alone seems to cream most of the Asian Century candidates.
And it’s no contest if population is divided into GDP.
Is the Asian Century a bit of an Education Revolution / Pink Batts thing perhaps?
GDP 2011
United States 15,076
China 7,298
Japan 5,867
Germany 3,607
France 2,778
United Kingdom 2,431
India 1,827
Australia 1,487
Korea 1,116
Indonesia 846
Taiwan 466
New South Wales 465
Thailand 346
Malaysia 288
Singapore 260
Hong Kong SAR 244
Philippines 225
New Zealand 159
Alfonso
4 Jan 13 at 9:52 am
The Eurotrash and Lefties can deny the reality of where the big government – massive welfare state experiment lead. They will do so right up until the end. The people who support these policies are nasty and they prey on the stupid who want to believe everything is free and can be paid for by the government.
John Comnenus
4 Jan 13 at 10:07 am
Point is, Alfie, the Aus non-mining economy is in recession and we have a big-spending debt-laden government, which may well be elected for another three years, that is killing wealth creation to feed its irrational feel-good social objectives. Without our political self-limitation, the Asians will zoom past in terms of GDP per capita.
Tom
4 Jan 13 at 10:10 am
Like the Occupy simpletons:
How can you talk sense with these people?
Gab
4 Jan 13 at 10:18 am
As Glenn Reynolds is wont to say, “Things that can’t go on forever, won’t.”
It really is that simple.
sdog
4 Jan 13 at 10:27 am
A lot of literature will also show you that, if you get on the right side of the Chinese “Government” you stand to make a lot of cash; and very quickly as a whole bunch of checks and balances, sustainability measures, environmental checks, stakeholder consultation etc…that are undertaken in most Western nations are not done in China!
I’m not propogating a totalitarian regime here but would be interested in people’s thoughts about why it is so much easier to do business in China than in over-regulated Australia or Europe? (although US still pretty open)
Lysander Spooner
4 Jan 13 at 10:56 am
Some of you may have noticed me quote this previously, but it is without a doubt one of the most far reaching quotes of that blood soaked human disaster and misery, the 20th Century.
It is also the only template that will grow Australia away from the economic basket case it is becoming.
Winston SMITH
4 Jan 13 at 11:11 am
Correct Tom….now realise anything that involves labour, from CAD programs to building Fords, will always be uncompetitive in Aust.
With anything slightly elaborately transformed Asia wins.
We have minerals, ag products, tourism, real estate…. education and financial services today but one day no more…
And we will never have anything else.
Alfonso
4 Jan 13 at 11:17 am
John at 1007, the ones who espouse these policies are divided into two classes. The ones who use the policies for personal advantage and are determined to milk the system without regard for the consequences to their fellow citizens; and those who are too bloody thick to see that they are being used by the first group.
I have some sympathy for the view of ?Martell, who, when he conquered a Muslim city was told “There are a lot of Christians here as well.” and he replied “Kill them all, God will sort them out.”
Winston SMITH
4 Jan 13 at 11:24 am
Alfonso, I have no idea where you got your GDP per capita figures from, but the CIA Factbook tells a very different story:
https://www.cia.gov/library/publications/the-world-factbook/fields/print_2004.html
For Australia, the 2011 figure is US$40 200 (2011 estimate), the US is $48 300 and the world average is $11 900 per capita.
I wouldn’t stake my life on those figures, but the Factbook is way better than Wikipedia and in this case, looks a lot closer to reality than the strange numbers in your post.
johanna
4 Jan 13 at 12:11 pm
“world as a whole will be 50 per cent richer, but Europeans will be 50 per cent poorer.”
Sums up the Lima Declaration quite nicely, with abit of Agenda 21 thrown in.
Paul
4 Jan 13 at 12:49 pm
So true, yet we hear Marxists claim that free market capitalism is an exploitative system.
I am coming to notice this phenomenon more and more with the left. They are shameless in accusing their opponents of their own sins.
A prime example is the government accusing AbbottAbbottAbbott of being relentlessly negative and engaging in personal politics, despite the most personal attacks (Abbott is a ‘misogynist’ and a ‘thug’) and blame shifting coming from them.
I think projection is the only way, psychologically, that they can deal with their own shortcomings.
Skuter
4 Jan 13 at 2:14 pm
‘(P)eople’s thoughts about why it is so much easier to do business in China than in over-regulated Australia or Europe?’
Guanxi…
one old bruce
4 Jan 13 at 2:23 pm
It really is worrying. The whole situation almost looks like some sort of deliberate attempt at bringing down the Western capitalist system. Just to speculate, after socialism failed is it possible the left decided they would make capitalism look like it’s ‘failed’ as well?
There is an angry leftist meme I once saw that basically said “Regulate Capitalism until it isn’t capitalism any more… ‘see Capitalism doesn’t work’”!
Seem fanciful? Maybe, then again, I’ve never had dealings with any leftist that wasn’t also an immature child. Leftists don’t accept that they are wrong, all they do is chuck a tantrum, just like my toddler son does when he wants something.
MattR
4 Jan 13 at 2:26 pm
Another good one from Matt, this time on peak farmland.
Warning: greenie heads may explode.
Lazlo
4 Jan 13 at 2:33 pm
Was talking to close friends with a small manufacturing facility. They have returned from a scouting trip to India with the intention of finding a joint-venture partner to open manufacturing in India.
They despair at having to do this, but they have calculated that each employee they put on costs them 1.9 times that employees salary. And that doesn’t include the possible future liabilities created by not filling out the right form and ticking off a local finger-waver or fine-issuer, or worse, having an employee get mixed up with a labor law firm and returning with a company-destroying suit.
They can make money even with all the extra costs loaded on top of a salary. But the regulators and clipboard-wielders just grind them down day after day, from all levels of government, to the point where they are close to saying ‘EFF IT’ and just redeploy the capital to India. It’s ironic that bribery is actually cheaper and more certain than having to navigate your way through bureaucracy.
What happened to the MV Abel Tasman is being repeated a thousand times a day through the entire strata of productive enterprises. Only they don’t all make the news until the owner decides to call it quits. Then the news team turns up at the gates and calls them names like ‘heartless’ and ‘greedy’.
brc
4 Jan 13 at 2:40 pm
johanna….
Source: World Economic Outlook, October 2012, International Monetary Fund
The numbers are USD billions.
http://www.business.nsw.gov.au/invest-in-nsw/about-nsw/economic-and-business-climate/national-economy
Alfonso
4 Jan 13 at 3:35 pm
How to arrest the decline in the west then, whilst considering the inevitable voter backlash against any welfare/public sector cuts?
Cory Olsen
4 Jan 13 at 3:37 pm
Winston, you refer to a slightly different conflict, the massacre at Beziers during the Roman Catholic Abigensian Crusade. The statement “kill them all, God will know his own” refered to Christians living among ‘heretics’.
The sentiment though, that brutal deaths do not matter if it is justified by the end sought, is a common enough one in our sad times too.
Elizabeth (Lizzie) B.
4 Jan 13 at 4:00 pm
Alfonso, your numbers are rubbish, as anyone who lives in the real world can recognise.
I have better things to do than explain to you what is wrong with the notion that Australia’s GDP per capita is about $1 500, or that NSW GDP per capita is less than $500. It’s barking mad.
Go away and do Years 1-7, then come back and improve the quality of your comments.
johanna
4 Jan 13 at 4:01 pm
oops – it is = they are
Elizabeth (Lizzie) B.
4 Jan 13 at 4:01 pm
Alfonso is citing GDP not GDP/capita. Can’t see the point of proffering raw GDP figures for comparison but perhaps he’ll justify their use.
Cold-Hands
4 Jan 13 at 4:10 pm
A reference to the so called Arab Spring sweeping through Libya, Egypt and Syria?
Cory Olsen
4 Jan 13 at 4:11 pm
Thanks Lizzie. I was using the old Mk1 memory and it seems to have gone to shit a bit after spending about six weeks in CCU in a grossly hypoxic state…
Winston SMITH
4 Jan 13 at 4:26 pm
Try and concentrate johanna….
Is “the numbers are USD billions” getting through….it’s not a difficult concept. Arts was it?
Hands…. an indication that the Asian Century is based on modelling, China can produce whatever numbers it wants for your viewing pleasure. Let’s see how that all works out for the cheer squad.
Alfonso
4 Jan 13 at 5:10 pm
No, it’s about making predictions on maintaining or increasing growth rates.
A 2% compound differential say has being implications over an ocean of time.
JC
4 Jan 13 at 5:15 pm
Ah, oceans of time ….. the ‘Japanese triumph over the US’ call was errrr…premature, the ‘Sth American Economic triumph’ was a currency charade….the EU is about to go national.
Chinese banks may end up carrying as much non realisable rubbish on their balance sheets x 10 than the Japs ever did.
The talking heads don’t want you traders worrying about that.
Some of us do.
Warning Will Robinson.
Alfonso
4 Jan 13 at 8:17 pm