Joined: 01 Mar 2004 Posts: 9289 Local time: 8:27 AM Location: Where Scum Are
Posted: Mon Jul 16, 2007 10:06 am Post subject: What Causes Wealth?
I am curious to hear or be led to resources that describe economic theories relating to the generation of wealth. I'm not interested in personal wealth - I'm more interested in the "wealth of nations," (lol - should I reread Smith?) or wealth from a macroeconomic perspective. How do societies and nations, as a whole, become more prosperous? How do citizens gain an increase in purchasing power?
Any links or explanations from posters would be appreciated. _________________ The whores and politicians will shout 'save us'...
Joined: 29 Mar 2003 Posts: 1114 Local time: 12:27 PM Location: Georgia
Posted: Mon Jul 16, 2007 10:40 am Post subject:
There are some different theories regarding why some nations are poor and other are wealthy.
A leading idea during the 19th century was what is known as Dependence Theory, being the idea that larger, wealthier nations are dependent on poorer smaller nations because they exploit the natural resources and labor of the populations. This played a role in the colonialism we saw from European powers during the industrial era. However, dependence theory fails to account for several anomalies that suggest the opposite, that small nations can be wealthy and not exploit the resources of other nations. In fact, many nations don't necessarily need to be rich in natural resources or large populations to become wealthy as examples like Hong Kong show. You could also draw a comparison between Japan and Russia, Japan having little land and few natural resources but being very wealthy and Russia have lots of land, people, and natural resources but being incredibly poor.
My view is that the wealth of nations is caused largely by the Rule of Law (something my legal professors beat into our heads ona regular occasion). The ability to trust in the law and the belief that the law will be applied equally and fairly to all is important to giving individuals the peace of mind to be prosperous. The best systems are "property based." Giving people the right to private ownership is essentially giving them the right to exclude others. It's also important to note that property is not specifically the possession of a particular thing, but simply the control of it. A good example of how private property helps the poor, as well as the rich, is from the economist Hernando de Soto (not the explorer) who did some work in Peru ([url=http://en.wikipedia.org/wiki/Hernando_de_Soto_(economist)]Link[/url]). In Peru, they found that granting basic property rights to long time "squatter" families was associated with a 17% increase in total household work, a 47% increase in the probability of working outside the home, and a 28% decline in the likelihood of child labor in that particular family (Source: The Legal and Regulatory Environment of Business). Being able to trust in the law to protect your private property frees you up to do more prosperous things like working instead of having to personally protect all your possessions.
Hope that helps. _________________ "'All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident."
Joined: 15 Jun 2004 Posts: 3942 Local time: 2:27 PM Location: Poland
Posted: Mon Jul 16, 2007 10:46 am Post subject: Re: What Causes Wealth?
Philosophos wrote:
I'm not interested in personal wealth - I'm more interested in the "wealth of nations," (lol - should I reread Smith?) or wealth from a macroeconomic perspective.
I'm not sure I understand the difference.
Isn't the wealth of a nation nothing more then personal wealth, but on a larger scale? _________________
It is as though your species' brain is too small to hold a simple thought such as, WE WILL KILL YOU FOR DISOBEYING!
This is not a complex idea.
Joined: 01 Mar 2004 Posts: 9289 Local time: 8:27 AM Location: Where Scum Are
Posted: Mon Jul 16, 2007 10:57 am Post subject: Re: What Causes Wealth?
Ivan_Ivanov wrote:
Philosophos wrote:
I'm not interested in personal wealth - I'm more interested in the "wealth of nations," (lol - should I reread Smith?) or wealth from a macroeconomic perspective.
I'm not sure I understand the difference.
Isn't the wealth of a nation nothing more then personal wealth, but on a larger scale?
No, as there may be inequality amongst the population - and the mean is sensitive to outliers.
But yes, in the sense that there is a tie between micro- and macro-economics.
My request is for an explanation from a larger perspective. If you know of a theory that bridges the two, and can explain it to me, it'd be appreciated. _________________ The whores and politicians will shout 'save us'...
Joined: 08 Mar 2007 Posts: 2754 Local time: 8:27 AM
Posted: Mon Jul 16, 2007 11:47 am Post subject:
Not sure if this helps, but I read this article a year ago and it made me think of the topic:
Quote:
COPYRIGHT 2003 Financial Times Ltd.
(From BBC Monitoring International Reports)
Zhongguo Xinwen She
"In order to achieve the strategic goal of making our people wealthy and our nation strong and continuously enhance the proportion of China's comprehensive national strength in the entire world, China will give full play to its strategic dominance, turn its inferior position into a strategic superiority, and advance from an economically huge country to an economically strong country in the world."
Hu Angang, the director of the National Information Research Centre at Tsinghua University and expert in the study of national conditions, made the above statement at the First China's Competitiveness Forum today [22 March].
Hu Angang points out, we must analyse the developmental stages that China is situated in, put into order and prioritize the various opportunities and challenges it faces, and further understand China's goals and interests in the economic globalization. The period from 1980 to 2020 marks an era for the soaring up of China's economy. China's second and third generation leaders initiated and put forward reforms and opening up, enabling China to sustain a high speed economic growth and to enter into the economic take-off period.
This renowned expert in the study of national conditions holds that China is now in the middle point of this rapid soaring process. In the next 20 to 30 years, China's basic goals are to strengthen its investment in various strategic resources, continuously enhance its proportion in the total sum of the world's resources, and enable China to advance from an economically huge country to an economically strong country, from a regional big country to a global superpower. [Hu cites his 8-point proposals as follows]:
First, maintain a stable and steady economic growth, narrow down the gap between China and the United States in the total economic output, and continuously increase per capita income.
Second, further reinforce our investment in human resources, achieve our goal of universalizing the basic education, speed up developing secondary and higher education, increase opportunities for vocational schooling and training, and establish the world's largest society that aspires learning.
Third, strive for letting the environment resources adapt to a market mechanism and maintain a sustainable development in their utilization, conserve resources, and make full use of the global strategic resources.
Fourth, speed up the transition from the growth induced by labour investment to the growth induced by knowledge and technology.
Fifth, speed up reforms in financial institutions and systems, regularize the capital market, and open up bank insurance and security market.
Sixth, establish a system of public management and public finance, further enhance the state's ability to absorb financial resources and to provide the necessary basic services for the whole country.
Seventh, raise sharply the proportion of the national defence expenses in GDP and increase our national defence strength.
Eighth, further push on the process towards free trade and investment freedom.
Hu Angang says, to realize China's dream of enriching the country and empowering the people, we must enhance our global competitiveness. A strong country is the basis for enriching people, enriching people is the goal of a strong country. To enhance China's global competitiveness can therefore best guarantee to enrich our people and strengthen our country.
Source: Zhongguo Xinwen She news agency, Beijing, in Chinese 22 Mar 03
What I found interesting, is that She is laying out steps for a nation that is, for the most part, very developed, but obviously wants to put itself on a path of wealth.
Joined: 27 Aug 2003 Posts: 23071 Local time: 7:27 AM Location: Warner Robins, GA
Posted: Mon Jul 16, 2007 11:53 am Post subject:
"First, maintain a stable and steady economic growth, narrow down the gap between China and the United States in the total economic output, and continuously increase per capita income."
thats a good first step. _________________ -=The Believer is Happy; the Skeptic is Wise=-
Joined: 15 Jun 2004 Posts: 3942 Local time: 2:27 PM Location: Poland
Posted: Mon Jul 16, 2007 11:58 am Post subject: Re: What Causes Wealth?
Philosophos wrote:
No, as there may be inequality amongst the population - and the mean is sensitive to outliers.
Well, yes you have to keep that in mind, but how can you speak of the wealth of nations without mentioning the wealth of the individual.
They are essentially the same thing and you seem to admit as much in your original post when you asked:
Quote:
How do citizens gain an increase in purchasing power?
And to this the answer is very simple: they produce more goods.
Quote:
My request is for an explanation from a larger perspective. If you know of a theory that bridges the two, and can explain it to me, it'd be appreciated.
I dunno, maybe I could answer that but first you'd have to explain what do you understand by 'the wealth of a nation', because I can't bring myself to think about it in any other way then 'the sum of personal wealth of it's people'. _________________
It is as though your species' brain is too small to hold a simple thought such as, WE WILL KILL YOU FOR DISOBEYING!
This is not a complex idea.
Joined: 01 Mar 2004 Posts: 9289 Local time: 8:27 AM Location: Where Scum Are
Posted: Mon Jul 16, 2007 12:31 pm Post subject: Re: What Causes Wealth?
Ivan_Ivanov wrote:
And to this the answer is very simple: they produce more goods.
Okay. Can you complete the thought for me, then? They produce more goods, and so... X ... thus leading to greater purchasing power. Because of increased purchasing power... Y ... leading to overall greater prosperity throughout the nation. _________________ The whores and politicians will shout 'save us'...
Joined: 01 Mar 2004 Posts: 9289 Local time: 8:27 AM Location: Where Scum Are
Posted: Mon Jul 16, 2007 12:34 pm Post subject:
Moloth wrote:
"First, maintain a stable and steady economic growth, narrow down the gap between China and the United States in the total economic output, and continuously increase per capita income."
thats a good first step.
And how does a nation do that? _________________ The whores and politicians will shout 'save us'...
Joined: 30 Aug 2006 Posts: 8036 Local time: 7:27 AM Location: D-brane
Posted: Mon Jul 16, 2007 12:38 pm Post subject: Re: What Causes Wealth?
Philosophos wrote:
Ivan_Ivanov wrote:
And to this the answer is very simple: they produce more goods.
Okay. Can you complete the thought for me, then? They produce more goods, and so... X ... thus leading to greater purchasing power. Because of increased purchasing power... Y ... leading to overall greater prosperity throughout the nation.
It is this whole thing: wealth=more goods, that bugs me. Are you wealthier if you owe 3 TVs, 4 cars, and 17 copies of Santa Claus Conquers the Martians???
Joined: 30 Aug 2006 Posts: 8036 Local time: 7:27 AM Location: D-brane
Posted: Mon Jul 16, 2007 12:43 pm Post subject:
Philosophos wrote:
Moloth wrote:
"First, maintain a stable and steady economic growth, narrow down the gap between China and the United States in the total economic output, and continuously increase per capita income."
Joined: 27 Aug 2003 Posts: 23071 Local time: 7:27 AM Location: Warner Robins, GA
Posted: Mon Jul 16, 2007 1:12 pm Post subject:
Spec wasn't the one that wrote that article, and, last i checked, she wans;t even Chinese. _________________ -=The Believer is Happy; the Skeptic is Wise=-
Joined: 08 Mar 2003 Posts: 10021 Local time: 6:27 AM Location: USA
Posted: Mon Jul 16, 2007 1:21 pm Post subject: Re: What Causes Wealth?
Philosophos wrote:
I'm not interested in personal wealth - I'm more interested in the "wealth of nations," (lol - should I reread Smith?) or wealth from a macroeconomic perspective.
Ivan_Ivanov wrote:
I'm not sure I understand the difference.
Isn't the wealth of a nation nothing more then personal wealth, but on a larger scale?
Philosophos wrote:
No, as there may be inequality amongst the population - and the mean is sensitive to outliers.
But there really is no such thing as the wealth of nations, though. It's only the aggregate of the individuals. It's like saying "society does such and such". _________________ aa #51, DNRC o-, Member of the [H]orde
Atheist Minister for St. Dogbert.
"No being is so important that he can usurp the rights of another"
Picard to Data/Graves "The Schizoid Man"
Joined: 08 Mar 2007 Posts: 2754 Local time: 8:27 AM
Posted: Mon Jul 16, 2007 1:24 pm Post subject:
Then by nation, are we saying the governing body of that nation? Or just all interested parties for the development of that particular nation? _________________ Fuck you bitch!!! I told you the asparagus is in the freezer! - William Shatner
What do you call someone that doesn't laugh at asparagus jokes? A human being.
Joined: 25 Apr 2004 Posts: 7247 Local time: 4:27 AM Location: Next door.
Posted: Mon Jul 16, 2007 1:55 pm Post subject: Re: What Causes Wealth?
Philosophos wrote:
I am curious to hear or be led to resources that describe economic theories relating to the generation of wealth. I'm not interested in personal wealth - I'm more interested in the "wealth of nations," (lol - should I reread Smith?) or wealth from a macroeconomic perspective. How do societies and nations, as a whole, become more prosperous? How do citizens gain an increase in purchasing power?
Any links or explanations from posters would be appreciated.
Technology.
You've probably heard this before, but I don't think it's any more complicated than this.
Inventions like the plow, or the cultivation of grain. A large modern nation isn't fundamentally any different than a small community of stone age farmers. What resources do they have within easy reach? What sort of knowledge do they have that makes there efforts more efficient?
Cultivation of grain for example. How much LESS "purchasing power" dose a farmer have at the end of the day if he has to scavenge out from tall weeds, wild grain that's growing all over the place? All his days effort got him a crappy little pile. Just enough to eat. If he figures out ways to organise the grain, and selects for the grain that stands straight up, and dosn't drop it's seeds early, then he will have a big pile of grain. Enough to keep him fed for a few days maybe. He has more time to work on other things, because the grain situation dosn't eat up all his time. Eventually he might have more grain than he can eat. Some one he knows has a shit load of fire wood, so he trades grain for fire wood... now he has to do even less work. If he keeps this up he might become a grain specialist.
Complicated stuff like politics is just the result of people in general having a surplus of what they need, or want. That's wealth.
I'm over simplifying, and this explains it far better than I ever could:
_________________ "-- Upon this a question arises: whether it be better to be loved than
feared or feared than loved? It may be answered that one should wish to
be both, but, because it is difficult to unite them in one person, it
is much safer to be feared than loved, when, of the two, either must be
dispensed with."-- Niccolò Machiavelli
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