LaFeber's recipe for economic growth
In one of the most biased textbooks I have ever read, Walter LaFeber states the following in his America, Russia, and the Cold War:
Not a mention of free markets, only references to planning, guidance and having lots of intelligent people. If that's all it takes, then why exactly did the Soviet Union collapse? They had some of the best scientists in the world, free university education and a whole lot of planning. I guess their planning wasn't intelligent enough. The Soviet Union also had a high investment rate, with investments allocated by "intelligent" technocrats. And how did it turn out?
As for Japan and Germany, neither really managed to plan long-term. The Japanese government got so entangled in subsidizing its enterprises that when the time came to pull the plug, they couldn't, as a result of which Japan has had two lost decades. Germany has been liberalizing its economy precisely because some of the welfare state policies it adopted are not sustainable in the long run. When these two economies grew the fastest after the war, it was in large part thanks to catching up after being torn to pieces by years of war. Compared to the rest of the world, their economies were still overwhelmingly liberal (as in free). The fact is that both countries would have witnessed similar, maybe even much higher, growth rates if their governments had simply kept their hands off. This is the recipe that allowed the West to rise above the rest of the world in the first place, long before anyone even dared to mention "public education".
Praising education as some Holy Grail is dangerous; it sends governments on a wild-goose chase, as if educating the people of Africa somehow could bring about an economic miracle. Don't forget that our comprehensive public education system appeared relatively late, decades after we had shed ourselves of extreme poverty that so plagues the (un)developing world.
5. Are the American people prepared for the post-Cold War world?
(...) The Soviet Union, after all, rotted from the inside out. On the other hand, Japan's and Germany's rise to economic power occurred because of their educated workforces, intelligent governmental guidance, ability to plan long-term and high savings rates (three to four times the rates of Americans) that catered money for investment rather than a towering consumer indebtedness.
Not a mention of free markets, only references to planning, guidance and having lots of intelligent people. If that's all it takes, then why exactly did the Soviet Union collapse? They had some of the best scientists in the world, free university education and a whole lot of planning. I guess their planning wasn't intelligent enough. The Soviet Union also had a high investment rate, with investments allocated by "intelligent" technocrats. And how did it turn out?
As for Japan and Germany, neither really managed to plan long-term. The Japanese government got so entangled in subsidizing its enterprises that when the time came to pull the plug, they couldn't, as a result of which Japan has had two lost decades. Germany has been liberalizing its economy precisely because some of the welfare state policies it adopted are not sustainable in the long run. When these two economies grew the fastest after the war, it was in large part thanks to catching up after being torn to pieces by years of war. Compared to the rest of the world, their economies were still overwhelmingly liberal (as in free). The fact is that both countries would have witnessed similar, maybe even much higher, growth rates if their governments had simply kept their hands off. This is the recipe that allowed the West to rise above the rest of the world in the first place, long before anyone even dared to mention "public education".
Praising education as some Holy Grail is dangerous; it sends governments on a wild-goose chase, as if educating the people of Africa somehow could bring about an economic miracle. Don't forget that our comprehensive public education system appeared relatively late, decades after we had shed ourselves of extreme poverty that so plagues the (un)developing world.
Labels: africa, classical liberalism, economy, english, europe, socialism, welfare state