malthusian growth studies101Is Income from Immigration the Best Hope for Developing Nations?
I call this immigration. I gonna pick
fruit, wash cars, my wife gonna be a
nanny. Hey You gringos don' wanna do eet!By Gregory Clark, Princeton University Press
Posted on November 21, 2007, Printed on November 21, 2007
http://www.alternet.org/story/65504/Introduction by Colin Greer, president of the New World
Foundation in New York:A Farewell to Alms is a convention-challenging book. Author Gregory Clark Chairman of Economics Dept at UC DAVIS. gives us a history of the world through a study of how the industrial revolution came to be. Where did come from he asks and what can we learn from its emergence and zenith in the UK by the 19th century. The following are some of the conventions and misconceptions Clark challenges.
Three misconceptions about income:
1. People don't need ever-increasing financial incentive to keep
working. Those big salaries for corporate execs are not required for
economic growth.2. Higher income does not even come close to brining happiness. Global
studies show virtually no correlation between high income and success in
the pursuit of happiness.3. Even though there has been low fertility in the West since World War
II, prior to that and increasingly more so now, rich people have more
kids than poor people. In countries that have industrialized throughout
the last few hundred years, it has not been unusual for as many as sixty
percent of poor people to be without children. For rich people, children
are beloved extensions of their spending capacity.Three misconceptions about economic development:
1. It's a mistake to try to make pre-industrial societies look like us
quickly; the World Bank and Jeffrey Sachs, not withstanding. It's
counterproductive to bring on the medical technology unless you're
investing in the technological foundations of economic growth. Greater
longevity without greater financial resources will lead to
overpopulation which will make poor people poorer. Fact is, it took the
West from the years 1200 to1800 to go from the early conditions of
industrial readiness to full-fledged industrial revolution.Shock therapy won't do it quickly. World Bank equations for progress and
industrial growth are a bit like an SAT test for non-readers.
Micro-lending is a better step but it needs to be rooted in and
generative of resilient local economy.2. There may be no endless future of income security for western workers
no matter what level their education. The Clinton promise of an educated
workface protecting American incomes from global cheap labor is a false
one. Other countries on an economic growth track will eventually
challenge educated American workers and, Clarke argues, technological
advances may in fact lead to segments of the work force having no work
to do. A challenge to our public responsibility and to democracy.3. Public spending for museums or public housing is not a drain on
economic growth. We can spend money on the public good without shooting
ourselves in the foot. It's just not true that taxes are bad for the
economy.A final convention breaker:
Clark examines outcome data to show that the impact of immigrant
remittances from the U.S to their home countries has a far greater
beneficial effect than all the humanitarian aid dollars.This is because the scale is so much greater and because it goes
directly to people and local economies, avoiding the impediments of
corrupt and incompetent governments.****
The following is an excerpt from Gregory Clark's "A Farewell to Alms"
(Princeton University Press, 2007).The basic outline of world economic history is surprisingly simple.
Before 1800 income per person -- the food, clothing, heat, light, and
housing available per head -- varied across societies and epochs. But
there was no upward trend. A simple but powerful mechanism, the
Malthusian Trap, ensured that short-term gains in income through
technological advances were inevitably lost through population growth.Thus the average person in the world of 1800 was no better off than the
average person of 100,000 BC. Indeed in 1800 the bulk of the world's
population was poorer than their remote ancestors. The lucky denizens of
wealthy societies such as eighteenth-century England or the Netherlands
managed a material lifestyle equivalent to that of the Stone Age. But
the vast swath of humanity in East and South Asia, particularly in China
and Japan, eked out a living under conditions probably significantly
poorer than those of cavemen.The quality of life also failed to improve on any other observable
dimension. Life expectancy was no higher in 1800 than for
hunter-gatherers: thirty to thirty-fie years. Stature, a measure both of
the quality of diet and of children's exposure to disease, was higher in
the Stone Age than in 1800. And while foragers satisfy their material
wants with small amounts of work, the modest comforts of the English in
1800 were purchased only through a life of unrelenting drudgery. Nor did
the variety of material consumption improve. The average forager had a
diet, and a work life, much more varied than the typical English worker
of 1800, even though the English table by then included such exotics as
tea, pepper, and sugar.And hunter-gatherer societies are egalitarian. Material consumption
varies little across the members. In contrast, inequality was pervasive
in the agrarian economies that dominated the world in 1800. The riches
of a few dwarfed the pinched allocations of the masses. Jane Austen may
have written about refined conversations over tea served in china cups.
But for the majority of the English as late as 1813 conditions were no
better than for their naked ancestors of the African savannah. The
Darcys were few, the poor plentiful.So, even according to the broadest measures of material life, average
welfare, if anything, declined from the Stone Age to 1800. The poor of
1800, those who lived by their unskilled labor alone, would have been
better off if transferred to a hunter-gatherer band.The Industrial Revolution, a mere two hundred years ago, changed forever
the possibilities for material consumption. Incomes per person began to
undergo sustained growth in a favored group of countries. The richest
modern economies are now ten to twenty times wealthier than the 1800
average. Moreover the biggest beneficiary of the Industrial Revolution
has so far been the unskilled. There have been benefits aplenty for the
typically wealthy owners of land or capital, and for the educated. But
industrialized economies saved their best gifts for the poorest.Prosperity, however, has not come to all societies. Material consumption
in some countries, mainly in sub-Saharan Africa, is now well below the
pre-industrial norm. Countries such as Malawi or Tanzania would be
better off in material terms had they never had contact with the
industrialized world and instead continued in their preindustrial state.
Modern medicine, airplanes, gasoline, computers -- the whole
technological cornucopia of the past two hundred years -- have succeeded
there in producing among the lowest material living standards ever
experienced. These African societies have remained trapped in the
Malthusian era, where technological advances merely produce more people
and living standards are driven down to subsistence. But modern medicine
has reduced the material minimum required for subsistence to a level far
below that of the Stone Age. Just as the Industrial Revolution reduced
income inequalities within societies, it has increased them between
societies, in a process recently labeled the Great Divergence. The gap
in incomes between countries is of the order of 50:1. There walk the
earth now both the richest people who ever lived and the poorest.Thus world economic history poses three interconnected problems: Why did
the Malthusian Trap persist for so long? Why did the initial escape from
that trap in the Industrial Revolution occur on one tiny island,
England, in 1800? Why was there the consequent Great Divergence? This
book proposes answers to all three of these puzzles -- answers that
point up the connections among them. The explanation for both the timing
and the nature of the Industrial Revolution, and at least in part for
the Great Divergence, lies in processes that began thousands of years
ago, deep in the Malthusian era. The dead hand of the past still exerts
a powerful grip on the economies of the present.***
The crucial factor was the rate of technological advance. As long as
technology improved slowly, material conditions could not permanently
improve, even while there was cumulatively significant gain in the
technologies. The rate of technological advance in Malthusian economies
can be inferred from population growth. The typical rate of
technological advance before 1800 was well below 0.05 percent per year,
about a thirtieth of the modern rate.In this model the economy of humans in the years before 1800 turns out
to be just the natural economy of all animal species, with the same
kinds of factors determining the living conditions of animals and
humans. It is called the Malthusian Trap because the vital insight
underlying the model was that of Reverend Thomas Robert Malthus, who in
1798 in An Essay on the Principle of Population took the initial steps
toward understanding the logic of this economy.In the Malthusian economy before 1800 economic policy was turned on its
head: vice now was virtue then, and virtue vice. Those scourges of
failed modern states -- war, violence, disorder, harvest failures,
collapsed public infrastructures, bad sanitation -- were the friends of
mankind before 1800. They reduced populations pressures and increased
material living standards. In contrast policies beloved of the World
Bank and the United Nations today -- peace, stability, order, public
health, transfers to the poor -- were the enemies of prosperity. They
generated the population growth that impoverished societies.***
The Industrial Revolution
The stasis of the preindustrial world, which occupied most of the
history of mankind, was shattered by two seemingly unprecedented events
in European society in the years 1760-1900. The first was the Industrial
Revolution, the appearance for the first time of rapid economic growth
fueled by increasing production efficiency made possible by advances in
knowledge. The second was the demographic transition, a decline in
fertility which started with the upper classes and gradually encompassed
all of society. The demographic transition allowed the efficiency
advance of the Industrial Revolution to translate not into an endless
supply of impoverished people but into the astonishing rise of income
per person that we have seen since 1800. The second third of the book
examines these changes.The Industrial Revolution and the associated demographic transition
constitute the great questions of economic history. Why was the
technological advance so slow in all preindustrial societies? Why did
the rate of advance increase so greatly after 1800? Why was one
by-product of this technological advance a decline in fertility? And
finally, why have all societies not been able to share in the ample
fruits of the Industrial Revolution?There are only three established approaches to these puzzles. The first
locates the Industrial Revolution in events outside the economic system,
such as changes in political institutions, in particular the
introduction of modern democracies. The second argues that preindustrial
society was caught in a stable, but stagnant, economic equilibrium. Some
shock set forces in motion that moved society to a new, dynamic
equilibrium. The last approach argues that the Industrial Revolution was
the product of a gradual evolution of social conditions in the
Malthusian era: growth was endogenous. According to the first two
theories the Industrial Revolution might never have occurred, or could
have been delayed thousands of years. Only the third approach suggests
that there was any inevitability to it.The classic description of the Industrial Revolution have suggested that
it was an abrupt transition between economic regimes, as portrayed in
figure 1.1, with a change within fifty years from preindustrial
productivity growth rates to modern rates. If this is correct then only
theories that emphasize an external shock or switch between equlibria
could possibly explain the Industrial Revolution.The classic description has also suggested that significant
technological advances across disparate sectors of the economy
contributed to growth during the Industrial Revolution, again pointing
toward some economywide institutional change or equilibrium shift. This
implies that we should be able to find the preconditions for an
Industrial Revolution by looking at changes in institutional and
economic conditions in England in the years just before 1800. And waves
of economists and economic historians have thrown themselves at the
problem with just such an explanation in mind -- with spectacular lack
of success.The conventional picture of the Industrial Revolution as a sudden
fissure in economic life is not sustainable. There is good evidence that
the productivity growth rate did not experience a clean upward break in
England, but instead fluctuated irregularly over time all the way back
to 1200. Arguments can be made for 1600, for 1800, or even for 1860 as
the true break between the Malthusian and modern economies.When we try to connect advances in efficiency to the underlying rate of
accumulation of knowledge in England, the link turns out to depend on
many accidental factors of demand, trade, and resources. In crucial
ways, the classic Industrial Revolution in England in 1760-1860 was a
blip, an accident, superimposed on a longer-running upward sweep in the
rate of knowledge accumulation that had its origins in the Middle Ages
or even earlier.Thus, though an Industrial Revolution of some kind certainly occurred
between 1200 and 1860 in Europe, though mankind crossed a clear divide,
a materialist's Jordan at the gates of the Promised Land, there is still
plenty of room for debate about its precise time and place, and hence
debate about the conditions which led to it. And evolutionary account of
gradual changes is a much more plausible explanation than has previously
been appreciated.Despite the dominant role that institutions and institutional analysis
have played in economics and economic history since the time of Adam
Smith, institutions play at best a minor direct role in the story of
Industrial Revolution told here, and in the account of economic
performance since then. By 1200 societies such as England already had
all the institutional prerequisites for economic growth emphasized today
by the World Bank and the International Monetary Fund. These were indeed
societies more highly incentivized than modern high-income economies:
medieval citizens had more to gain from work and investment than their
modern counterparts. Approached from the Smithian perspective, the
puzzle is not why medieval England had no growth, but why today's
European countries, with their high tax rates and heavy social spending,
do not suffer economic collapse. The institutions necessary for growth
existed long before growth itself began.These institutions did create the conditions for growth, but only slowly
and indirectly over centuries and perhaps even millennia. Here the book
argues that the Neolithic Revolution, which established a settled
agrarian society with massive stocks of capital, changed the nature of
the selective pressures operating on human culture and genes. Ancient
Babylonia in 2000 BC superficially possessed an economy remarkably
similar to that of England in 1800. But the intervening years had
profoundly shaped the culture, and maybe even the genes, of the members
of agrarian societies. It was these changes that created the possibility
of an Industrial Revolution only in AD 1800, not in 2000 BC.Why an Industrial Revolution in England? Why not China, India, or Japan?
The answer hazarded here is that England's advantages were not coal, not
colonies, not the Protestant Reformation, not the Enlightenment, but the
accidents of institutional stability and demography; in particular the
extraordinary stability of England back to at least 1200, the slow
growth of English population between 1300 and 1760, and the
extraordinary fecundity of the rich and economically successful. The
embedding of bourgeois values into the culture, and perhaps even the
genetics, was for these reasons the most advanced in England.Both China and Japan were headed in the same direction as England in
1600-1800: toward a society embodying the bourgeois values of hard work,
patience, honesty, rationality, curiosity, and learning. They too
enjoyed long periods of institutional stability and private property
rights. But they were headed there more slowly than England. David
Landes is correct in observing that the Europeans had a culture more
conducive to economic growth.China and Japan did not move as rapidly along the path as England simply
because the members of their upper social strata were only modestly more
fecund than the mass of the population. Thus there was not the same
cascade of children from the educated classes down the social scale.***
The modern age began with the conquests by the Europeans of the
fifteenth century and later. The newly discovered societies of Africa,
America, and the Pacific sought in vain to stem the invasions of the
Europeans. The obsidian blades of the Aztecs were no match for Spanish
steel, the war clubs of the Maori of no avail against the British
muskets, the mud walls of Timbuktu scant bulwark against French
artillery. There followed the great age of imperialism, when Westerners
imposed themselves in all corners of the globe. For a while the West
conquered all. It shaped the political geography of much of the world;
it transplanted Africans and Asians to different continents. Territory,
technology, music, culture: as a consequence of the Industrial
Revolution the West seemed to have it all.But a visitor to the planet would see, ringing the modern West, a series
of fortifications protecting it from invasion by the poor societies of
South America, Africa, and South Asia. In the Mediterranean and South
Atlantic naval patrols try to intercept desperate boatloads of migrants
headed to the glittering cities of Europe. The U.S.-Mexico border is
increasingly lined with rusting iron battlements, walls of concrete, and
fences of wire. In the gaps, across the harsh Sonoran Desert, a trail of
empty plastic gallon jugs demarcates the march of an invading army of
desperately poor migrants from El Salvador, Guatemala, Honduras, and
Mexico. Patrols in the Caribbean intercept sailing boats packed with
Haitians trying to escape the violence and filth of Cité Soleil.History shows, as we have seen repeatedly in this book, that the West
has no model of economic development to offer the still-poor countries
of the world. There is no simple economic medicine that will guarantee
growth, and even complicated economic surgery offers no clear prospect
of relief for societies afflicted with poverty. Even direct gifts of aid
have proved ineffective in stimulating growth. In this context the only
policy the West could pursue that will ensure gains for at least some of
the poor of the Third World is to liberalize immigration from these
countries. We know a good deal about the economic consequences for
migrants from the historical record of countries like Britain, the
United States, Canada, Australia, and New Zealand, which had large flows
of immigrants in the modern era. That record shows that migrants,
particularly those from very-low-income countries, have been able to
achieve enormous income gains through migration. Aid to the Third World
may disappear into the pockets of Western consultants and the corrupt
rulers of these societies. But each extra migrant admitted to the
emerald cities of the advanced world is one more person guaranteed a
better material lifestyle.POSTER'S NOTE: Migration of workers is 'value-added' to two nations.
The First world gets cheap workers, hard working peons who do
things that nobody else has the patience to do, gardening, nanny work,
sewing, fruit picking. Big city sophisticates will NEVER do that! Next
the Third world family back home gets a check sent from the migrant worker.
They get radically wealthy compared to other peasants on the block,
eat better, send children to school, can buy birth control and organize
their country better. Not have to grow dope or anything. So It's a
win-win situation or why else do you think the USA has been
following this line of thinking since time began? HUH? "Give me
your huddled masses, yearning to be free...."Well, no sooner do I put that on the internet when my Pal writes me "They're all criminals. Social services for them cost us! " I respond: Your crazy --our workers make bank on those mariels and wetbacks. First we get great movies like Scarface, El Norte, then think of the additional judges, insane asylums, jails, border guards. They make bank. Everybody makes a living off ILLEGALS. Always look at the big picture. The Pharisees and Romans crucified CHRIST.It was still good! BIG PICTURE!
and I sign it >><))))('> Anita Sands Hernandez <'){{{{{><< cuz that was the signature he, being a devout Christian, sent to me!
<=== BACK TO MALTHUSIAN INDEX PAGE