[ekianjo]

> the reason US has a slightly more advanced economy than, say, Sweden, is not due to harsh working conditions. It's has more to do with human capital, a large unified market PLUS tons of military might abused to ensure cheap oil and resources.

Russia: huge human capital. Check. Large unified market. Check. Tons of Military Might abused to ensure cheap access to ressources. Check. Oh wait, I can do the same thing for China, too.

Of course those are NOT the only factors to predict how rich people are going to be. The economic system is the only KEY differenciator to build an economy. That should have been obvious by now, after we had so many great examples in the 20th century. Let's not spread the old false myths around.

[lukifer]

> The economic system is the only KEY differenciator to build an economy

Are you kidding? Socio-cultural values, religious beliefs, natural resources, foreign policy, domestic policy, monetary systems, infrastructure, none of these things matter at all?

Your inferences from history might have value if we had a reliable World Simulator, where we could change and control variables at will and observe the results. But we don't; extrapolating any kind of simple narrative from history pretty much guarantees you're at least partially wrong. Reality is complex, and is under no obligation to work in ways that make intuitive sense to us talking monkeys.

[ekianjo]

Socio-cultural values. Japan has totally different values from the US. China, same.Apparently that does not prevent them from all being prettu successful economically speaking.

Religious beliefs. Huh ? Japan, China, same as previous point. Totally different from Europe or US. But otherwise pretty successful countries. Where's the correlation between economy and religion?

Natural resources. Japan has no access to natural resources on their land. Singapore has no resources. Luxemburg has no resources. Switzerland has no resources. Holland has no resources. Funny how all those countries have rather healthy economies.

Foreign policy Agree on that one. But policies which do not support free exchange of goods tend to do rather badly. Cuba, anyone?

Domestic policy Domestic policy in China and in the US are totally different - you will find very few common points there. That does not seem to impact significantly their economic success, at least on the short term.

Monetary systems You have a point there, but since all countries have abandoned the Gold standard for long, basically we are all on fiat currency currently, no matter in which part of the world you live in. Money is now paper everywhere, it's hardly a differentiator.

Infrastructure Infrastructure usually derived from an economic system. It's when you have a growing economy and growing needs that you worry about infrastructures. Building roads and airports when people are starving is useless.

So, not many of the things you mentioned matter at all, I'm afraid. But feel free to prove me wrong.

[lukifer]

You're implying direct causal links. I'm talking about synergies, all the components I mentioned (and many others I didn't) operating together as a system.

Religion affects how people vote. Voting affects foreign policy. Foreign policy affects international trade. And on and on.

For a more concrete example: American capitalism isn't composed just of our currency and the laws on the books regarding incorporation, property, etc. It includes our belief systems about capitalism: the American Dream, Horatio Algers, Ayn Rand, "greed is good", the invisible hand, build a better mousetrap, and on and on. It includes the moral values of consumers, who might make a purchasing decision based on whether it has a green label, or says "Made in the USA". It includes the expectations of workers regarding conditions: Chinese workers put up with the conditions at FoxConn, whereas most Americans would quit or strike (for now, anyway).

> But policies which do not support free exchange of goods tend to do rather badly.

I challenge you to give me an example of a society that engages in a completely free exchange of goods. Even proto-libertarian countries like Switzerland still outlaw trade of certain things (drugs, organs, humans), levy taxes of some kind, and socialize some economic activity (health care, public safety). The only countries that do not are those without a functioning government, in which case trade cannot be free, because there is nothing stopping someone from taking what they want by force.

That said, I agree with the notion that societies do better when they allow people to become rich. But I take umbrage with the idea that our flavor of capitalism is inherently the best one, and the only other alternative is to become Cuba.

[ekianjo]

If you phrase it this way, I can agree with some of your points. I think, more than "allowing people to become rich", I would state "respect and recognition of private property" a an important philosophical factor to enable economic growth. As of today, I have yet to hear about societies where "everything belongs to everyone" ending up being economically successful. So that might be one trait leading to success or improvement.

As for the free movement of goods, I know there is no country in the world following pure free market policies. Therefore it is also unfair to judge free market based on the numerous imperfect application of its principles. Note, however, that we do have examples of societies working well without central government, such as the early days of the "Wild West" societies in the US. Those societies were basically growing at an exponential rate at the time with an ongoing flow of immigrants, while managing to self-control and police themselves. The book "The Not so Wild Wild West" explains this point very well, if you are interested to read about this.

One last thing. Obviously not every country has to follow either free market or end up like Cuba, however there is a clear trend: when a society decides to indulge in welfare and collectivism, it almost never goes back and ends up going bankrupt and ruining everyone. I do not know how familiar you are with the current situation in Europe, but over the past 30 years you could see the trend of massive public debt (fueled by government intervention in all aspects of private life) growing and growing over time. And now you get Greece, Italy, Portugal, Spain, close to bankrupcy. Hardly a coincidence.

[lukifer]

> respect and recognition of private property

At some level, private property is an invention of the State. Without that, the property belongs to whoever can defend it, and whoever has the most guns wins.

This becomes even more significant with the advent of intellectual property, also an invention of the State. There are many digital examples of "everything belongs to everyone" that are going extremely well, and luckily with zero government tyranny required. Meanwhile, the patent system is a mixed bag at best: sometimes promoting/reward innovation, sometimes inhibiting/punishing it. I don't know how this balance should be struck between sharing and ownership, but I know that the way we're handling it now is deeply sub-optimal.

The concept of ownership and the ways in which we trade are social constructs, the economic "rules of the road". They are malleable, not inherent, and we can rewrite those rules however we wish to manage externalities such as worker safety or environmental damage. Obviously, if it is done poorly (or disingenuously), the results will not go well. But we take for granted the times when it does go well.

> The book "The Not so Wild Wild West"

I'll look into this. I'm definitely a proponent of the social contract occurring at a more local level, where people are actually people instead of numbers in a database. But I'm skeptical that it is enough sustain this thing we call civilization. Just because people can be rational and altruistic does not mean they will.

> when a society decides to indulge in welfare and collectivism, it almost never goes back and ends up going bankrupt and ruining everyone

There is an element of truth to this; many European entitlements go too far and cost too much (as has often happened with American unions as well). But I don't buy that social programs are inherently inefficient; there are many things that matter which don't show up on balance sheets. Stress, health, environment, social bonds, self-determination, respect: these things all matter to a society's quality of life and its bottom line, but are very hard to measure or draw profit from.

Also, we must look at the other side of the historical coin: turn-of-the-century America, where industry held all the bargaining power, and the whole family had to work 60+ hour weeks in dangerous factories with no human rights protections. Or, workers who lived in "company towns", in a life one step away from indentured servitude. I have a hard time not seeing strong similarities between Amalgamated Warehouse Whatever and the Dickensian hellscape of a century ago (or Foxconn, for that matter).

I suppose I just don't like dogma: MARKETS GOOD, GOVERNMENT BAD. The common thread between democracy and capitalism is to lessen the corrupting influence of power by distributing it: one person = one vote, and every person wielding their own power over buying and selling. But there is no system that is immune from manipulation and corruption; the incentive to game the system and maximize one's own power to the detriment of others will never go away. If we want to prevent tyranny, we have to constantly evolve ways to distribute power again, whether it takes the form of markets, governments, communities, or new organizational patterns we haven't thought of yet.

[Intermernet]

I have a feeling that the MARKETS GOOD, GOVERNMENT BAD is along the same lines as ELEPHANTS GOOD, ICEBERGS BAD in that the two are only correlated by public opinion.

I also feel that the difference between communism and democracy is that in one I'm given a dollar, and in the other I'm given a vote. Do I use the dollar to buy the vote or vice versa?

[ekianjo]

I disagree with your point that "private property is an invention of the State". There is no need for any state to claim property on something. As you said, as long as you can defend what you have, it "belongs" to you. I'm pretty sure prehistoric men had a concept of property. Even animals have a sense of property. A dog will defend the bone it likes to chew on. A bird will fight to defend its nest. Property is rather natural.

I however agree when you say that intellectual property is an invention of the State, because that is precisely where it originates: the granting of monopoly to an individual by the hand of the King. There is no natural root in intellectual property.

> workers who lived in "company towns", in a life one step away from indentured servitude

Again, please put this rhetoric in perspective, not in the eyes of a 21st century person from a developped society, but in the eyes of a person of that time, who had the choice between staying in an enpoverished countryside, potentially victim of starvation and malnourishment, and the perspective of having a stable, paid job in a factory. People were NOT stupid. They made the choice of "more gains", not less. They ended up richer and in better position than where they started. They progressed on the social ladder. The very same story is happening with all these workers in China, queuing outside of Foxconn to get a good and sustainable job, compared to the Nothing they had in the countryside.

> The common thread between democracy and capitalism is to lessen the corrupting influence of power by distributing it: one person = one vote

Totally agree with the decentralization of power, but democracy is a poor tool to reach that goal. You elect high ranking officials who are above the laws. Who are all RICH, without exception. Who have immense powers over other individuals. And who can use violence to force their laws on you, or make you go to war and lose your life if they decide to do so. Government is, by itself, a huge body of asymmetrical power against individuals. You do not "choose" it, when you are born you are already, automatically, subject to it.

When you buy some goods, however, every dollar you spend is a vote for a product, a company. Should that company screw up, you will not buy it again. Its reputation will worsen. It will lose customers. It may go bankrupt. It is, actually, at the mercy of the decentralized power of customers who AGREE to buy it everyday or on a regular basis.

Governments (almost) never go bankrupt. Instead, they will tax you to death, they will take your property and declare it theirs (like when they forbid possession of Gold). And they will use violence to punish you and put you away in prison if you do not comply. And you will have no way out, but to leave the country (if you can).

Governments CAN be useful, but I think in most developed countries they have gone way further than what their initial role was supposed to be. That's a vast subject, anyway.

[batista]

Obviously not every country has to follow either free market or end up like Cuba

You forget that Cuba has had to work with a heinous embargo imposed upon them for decades. And that it does much much better, society wise, than the devastation, poverty, drug cartel rule, and foreign intervention that goes on in other Latin American countries, of not "socialist" persuasion.

when a society decides to indulge in welfare and collectivism, it almost never goes back and ends up going bankrupt and ruining everyone.

I'm not sure about that "clear trend". The US has a huge national debt, people living in the streets, 30 million people eating in public kitchens or with coupons, and 2 million people in jail? I've also been to Mississippi, Alabama and South Dakota among other states. There are places that are worse than third world areas. If it wasn't for the dollar imposed as a worldwide exchange metric from better times, the ability of the state to print inflated money, and the country's diplomatic might, anyone would call the country a failure.

I do not know how familiar you are with the current situation in Europe, but over the past 30 years you could see the trend of massive public debt (fueled by government intervention in all aspects of private life) growing and growing over time. And now you get Greece, Italy, Portugal, Spain, close to bankrupcy. Hardly a coincidence.

Hardly NOT a coincidence. Countries on the top echelons of the European and world economy have had (and still have) far more extended welfare than Greece, Italy, Portugal, Spain. Think Sweden, Denmark, Holland, etc. This has nothing to do with welfare, and a lot to do with corrupted government spending (a la Latin America), bribes to give overpaid state contracts to specific companies, bureaucracy etc. Plus, Germany controlling the Euro fiscal policy in a way benefiting the top-tier economies, to the detriment of smaller countries.

In fact, if you confuse welfare state with the near bankruptcy of those countries, how is the opposite working for, say, California?

[Intermernet]

Just to throw a spanner in the works, Australia has VERY similar socio-cultural values as the USA, lots of natural resources, racist foreign policy, US based financial infrastructure (free trade, anyone) and really, we're quite different from the USA in many ways.

Not sure how this fits with the geographic based theories on climate vs. behavior.

[batista]

Socio-cultural values. Japan has totally different values from the US. China, same. Apparently that does not prevent them from all being prettu successful economically speaking. Religious beliefs. Huh ? Japan, China, same as previous point. Totally different from Europe or US. But otherwise pretty successful countries. Where's the correlation between economy and religion?

Your argumentation continues in the same vain.

But he didn't said that Socio-cultural values have to be THE SAME for economic success.

He said that socio-cultural values are a FACTOR for economic success, which is a quite different thing.

For example, regarding cultural values: Japan has different values from the US, and China too. That doesn't mean that those kinds of values (Japan/China and US values) are not ALL suited for a successful economy, and a country with a different set of values (say, Mexico) wouldn't do as well.

So, the correlation of social values to economic success (which no economist/sociologist really argues against btw), is not that only ONE kind of value system can produce economic success, it's that different value systems do either well or bad on economy.

Same for religion, etc.

Natural resources. Japan has no access to natural resources on their land. Singapore has no resources. Luxemburg has no resources. Switzerland has no resources. Holland has no resources. Funny how all those countries have rather healthy economies.

Funny, how all those countries have different KINDS of economies. Natural resources is a huge factor for China or US like economic success. Not for Singapore (= a corporate hub), not for Kayman Islands (= a tax shelter), etc. That said, Japan without easy ACCESS to natural resources, on the other hand, would have been a complete failure.

[JohnnyBrown]

Another key difference is that the set of thoughts whose public expression could get a person killed, and the actual danger from expressing them, has been much smaller in the US than in those two countries for the past hundred years or so.

We've had our inquisitions here, but I think people tend to recognize them and call them what they are pretty quickly. See Eleanor Roosevelt's very public comments about McCarthyism.

[ekianjo]

I think freedom of expression plays a role somewhere, but not sure how critical it is in order be successful economically. If you take a look at China, again, if you vocally oppose the government you would end up in prison pretty fast, but that does not prevent people from engaging in commerce with relative large freedom. Commerce and Freedom of expression are not necessarily tied together.

Though, on a libertarian point of view, I agree that freedom makes sense in all aspects of life, not only in economic affairs.

[moldbug]

Good thing you're not a racist, JohnnyBrown. I take it the name "James Watson" doesn't ring any instant bells for you.

It's very easy to confuse an absence of persecution, with an absence of people who agree with you being persecuted. That just shows that you're on top and your enemies are on the bottom. Ie, all's right with the world.

Of course Eleanor Roosevelt didn't like McCarthyism - it was an attempt to persecute people like her. Eleanor Roosevelt was the alpha queen of the purge of the "isolationists." Not to mention the McCarthyites, who got purged pretty good themselves. You'll note that there's not a lot left of them. There's a lot left of Eleanor Roosevelt, however.

It's true that America doesn't generally shoot the people it purges, work them to death by forced labor, etc. We don't need to. Our methods are much more efficient than that.

[JohnnyBrown]

Good points. Also MLK and Malcolm X could stand as pretty prominent counterexamples to my argument.

[batista]

Russia: huge human capital. Check. Large unified market. Check. Tons of Military Might abused to ensure cheap access to ressources. Check.

Russia is only about 100-110 million people. One third of the US. So the "large unified market" is much smaller, as is the "human capital" pool, by which I don't mean people, but scientists, inventors, etc. And the military might that Russia has and uses to gain cheap access to resources is so smaller compared to the US it's not even funny. Plus, Russia is recovering from both the USSR state bureaucrat dictatorship AND the US/IMF BS doctrines imposed on the during the Yeltsin era.

Oh wait, I can do the same thing for China, too.

Well, unlike Russia, China DOES have all that. And China is doing rather well. It's on the up and up, and already poised to a larger economy that the US. So, if anything, this supports my argument.

[ekianjo]

Oh yeah, China is doing rather well NOW. How about China, like 20 or even 30 years ago ? It was a poor country, underdeveloped. And you know what changed ? Their economic system. Just that. It was so sudden in China you can easily trace the roots of their economic boom. It supports my argument, rather than yours.

[pyre]

  > And you know what changed ? Their economic system.

So the thing that we should all aspire to as a species is the venerable Chinese sweatshop? The 'perfect storm' of capitalism, anti-unionism, and corporatism?

[ekianjo]

You should go in China for once, and talk to Chinese people to better understand their situation. They were miserable in the countryside, and the "sweatshops" you mention are already providing them with a better life than what they had. That's why you will keep seeing those kind of news: http://www.theglobeandmail.com/news/technology/tech-news/fox...

By the way, that's where America was like 100 years ago. People need to work hard to get to high standards of living, in case you did not notice.

[cornell532]

Brilliant response.

Economic ignorance encountered here can be stupefying.

[ekianjo]

Yes, especially in a community of actual or wannabe entrepreneurs. I would expect people reading HN to be crystal clear about what creates economic value in society in the first place.

[pyre]

The cultural values in China are also different than in the West. Chinese culture (from my experience) tends to be less about the individual, and more about the group. This makes it easier for people to swallow 'hellish' conditions because they are sending money back home to their family, and therefore their family as a whole is 'better.'

Also, I wouldn't say that things like:

* Forcing foreign businesses to partner with a Chinese company if they want to do business in China.

or

* Kicking people out of their homes (with no compensation) to make way for construction/development (e.g. Chinese Olympic Stadium).

Necessarily jive with a capitalist society.

[batista]

You should go in China for once, and talk to Chinese people to better understand their situation. They were miserable in the countryside, and the "sweatshops" you mention are already providing them with a better life than what they had.

LOL. They were "miserable in the countryside" because their old way of living and farming was not a priority anymore for the central government, that needed city workers to build the country's industry. So, in essence they gave them incentives to come to the city, and they also made it so they the old village system wouldn't work, stopped subsiding, redirected resources, etc. It's a centrally planned economy, it's not a "coincidence".

The sweatshops

--and no quotes needed, those are real sweatshops, and 99% of the HN readership wouldn't stand an hour there (we're people that are even annoyed by browser popup windows and such first world problems), and yet some consider them as fit for the Chinese people--,

don't provide them "a better life than what they had", they just make it so that they are kept alive, by eating, and sending some money to their families back home. The "better life" they are "provided" is working 14-hours at best in hellish conditions, then sleeping till the next day, and drinking themselves to oblivion on weekends. Yeah, slightly better than dying of starvation, if those are your only two options.

Incidentally, that was the way the old English industrial revolution thing started. They forced farmers to work in the factories, in similar hellish conditions.

"While the average life expectancy all around Europe increased, that of the average factory worker decreased. There were "almost no safety devices on machines, accidents were common.' (Wallbank, 490) Edwin Chadwick's 'Report on the Sanitary Conditions of the Laboring Population of Great Britain' penned in 1842 provides a terrifying look inside the workplaces of the period. 'That the annual loss of life from filth and bad ventilation are greater than the loss from death or wounds in any wars in which the country has been engaged in modern times. That of the 43,000 cases of widowhood, and 112,000 cases of destitute orphanage relieved from the poor's rates in England and Wales alone, it appears that the greatest proportion of deaths of the heads of families occurred from the above specified and other removable causes; that their ages were under 45 years; that is to say, 13 years below the natural probabilities of life as shown by the experience of the whole population of Sweden.' (Chadwick, available online at: http://landow.stg.brown.edu/victorian/history/chadwick2.html)

[ekianjo]

LOL you too. Obviously you are ideology driven and refuse to see the facts that Chinese people make the deliberate choice, nowadays, to go in the cities and work in those "sweatshops" instead of staying in the countryside. Nobody is forcing them to do so. Nobody is forcing them to stay in the "sweatshops" with a gun on their head. It is a pragmatic choice.

And Yes, Living is better than dying of starvation. I don't know how one can even argue with that. If you live you can get married, have a family and children, and expand your overall satisfaction that you achieved something in the end.

I have been in China and I have seen and talked with the people who choose to lead that life, and for me this is very clear that they are better off. Feel free to believe whatever the evenings news tell you about the horrible conditions at Foxconn and other companies alike, they will still keep queuing for a job there, no matter what you think of them.

[cornell532]

This is an idiotic argument that ignores/sidesteps the main point of the parent.

No matter what you think of China's economy, it is leaps and bounds better than what it was 20 years ago and provides a dramatically superior quality of life for its citizens.

[chii]

People voted with their wallets. The verdict is very clear - most people prefer cheap goods to humanitarianism and proper treatment of workers.

[pyre]

So long as it's significantly abstracted away from them. If they were US workers, or people they might meet on the street, it would be a different issue. There is a disconnect.