TCS Daily


The Morality of Rising Inequality

By Tim Worstall - February 5, 2007 12:00 AM

Is inequality rising in the US? Alan Reynolds thinks it isn't, at least not very much, and Paul Krugman thinks it is, a lot. That last point would normally have me insisting that inequality is decreasing given my views of Professor K's political rhetoric but I'm not quite sure that even I could pull off such an argument.

If we try and get to an answer, a clear and unambiguous one, on this point we find ourselves in a morass of detail. Should we be looking at incomes? Very well, should they be pre- or post-tax ones? Should we include the benefits (Medicaid, the EITC, welfare payments) received by the poor? Should we be measuring by individuals, by households? Or should we measure consumption, or the hourly wage received by those paid hourly, or hourly income of all workers or....

Well, you get the picture, there's so many variables that we can pick and choose and show roughly whatever we'd like to. So I'd like to try and change the debate a bit. Let's look at something which in theory (and I would argue in practice is) should indeed increase inequality in the US: globalization. Further, I'll argue that this is a very good idea indeed, one that we should fully support.

The theory is the Stolper-Samuelson Theorem. Stripped to its essentials this says that we would expect the process of globalization to have the following effect: it will lower wages in the US and raise corporate profits (more precisely, returns to capital). In the poor countries that the US is trading with it will have the opposite effect: it will lower returns to capital and raise wages. Now, of course, there are other things going on as well, so it might well be (in the US almost certainly is) that wages for workers will not fall: just that they won't rise as fast as the other factors would make them do so. But this is indeed part of basic trade theory, it is precisely how we expect the world to work. No economist, certainly no trade economist (as Paul Krugman is and a very good one too) should be surprised at this happening.

That does make me wonder a little, therefore, at why Professor Krugman insists that there's something wrong with America's domestic economy, when he bemoans the paltry rises in the worker's incomes, for he should be expecting this anyway. But enough of that, I'm more interested in a larger question.

Greater inequality in the US as a result of globalization. Is this actually still a good thing for us to be doing, this globalization? Certainly, for those at the top it is, for they get to sell their talents on the world stage, rather than merely nationally or regionally. Tiger Woods made $90 million last year, Stephen Spielberg somewhere north of $200 million. That money is rolling in because people worldwide consume what they produce. But Joe Six-Pack is having a harder time of it, perhaps we should retreat in order to be fairer to the poor?

There are indeed those who make that argument but the flaw in it is that we need to look at a wider definition of who are the poor. As I've pointed out here before that same process is raising wages in China. As I've pointed out elsewhere, those wages are rising very strongly, too, 14% per year for a decade.

In fact, if we look at the work of Paul Ormerod or Xavier Sala i Martin we find that global inequality has actually been falling. This is the other side of the Stolper-Samuelson theorem kicking in of course. Globalization is raising the incomes of the workers in the poor countries (over and above what is happening as the countries develop) because of the trade off inherent in the model.

Which is really as far as the economics can take us: we can work out what is happening a lot of the time, we can work out why it is happening (again, most of the time) but economics doesn't deal with whether the outcome is a good or a bad thing. It can say that it is, that it exists, but morality is something you use to evaluate whether that existence is something you think is good or bad.

So to recap the argument. Leaving all other matters aside, we expect globalization to produce a rise in income inequality in the United States (and the other industrialized societies). We also expect it to raise incomes in the poor countries and thus reduce global income inequality. That does indeed seem to be what is actually happening.

Whether this is a good or a bad thing to be happening is another matter entirely, that depends upon our own moral senses. It is perhaps something to which there can be no "right" answer for it depends upon our own prejudices. Should we be more concerned about inequality in one country? Or across the world? As the bleeding heart classical liberal that I am I do wish that it was not one that caused the other: I would of course prefer there to be no downside at all to the poor becoming rich.

Yet in this particular instance I find that my own answer is quite simple. Those poor who are getting richer in other countries are not moving from one level of luxury to a slightly higher one. They are moving from destitution, from not knowing where the next meal is coming from, to something close to a middle class income. They are doing this in their hundreds of millions, across the globe, and that has to be a good thing.

I've deliberately used inequality above, but there's another phrase often used, relative poverty, to mean the same thing. Recasting the argument, globalization is increasing relative poverty in the rich countries, while at the same time abolishing absolute poverty in the poor ones. Put like that it seems quite clear to me that the price is worth paying, indeed, I would argue that anyone who disagrees simply isn't a liberal, classical or otherwise.


Categories:

65 Comments

Good fruit
Capital goes where it's treated best. You'll know a good tree by its fruit.

It seems to me that globalization has set free a large sum of capital from the predation of national rent-seekers such as unions, politicians, lawyers and lobbyists. This freed-up capital establishes productive enterprises where labor is cheap, plentiful, but most importantly, not yet predatory. The returns are high and the margins wide, and the destitute work their way to income security rather than twisting the right arms while greasing the right palms. To all but the rent-seekers, globablization looks, tastes and nourishes like good fruit.

Now, notice how our national rent-seekers have responded. Rather than lowering their rents to attract globalized capital back home, they've set out after it with ingenious yet obviously predatory gambits, such as "fair trade". Why? Because relinquishing the rents they've won in domestic capital would expose said rents' specious moral underpinnings, instead portraying the rent-seekers' conduct as "competition" rather than "solidarity", which terms in their moral taxonomy are synonymous with "evil" and "good".

Morality is the difference between personal convenience and social obligation. When invested in production, capital can't help but both create and fullfill social obligations. Sadly, capital will always attract the predatory rent-seekers, who will employ "moral" arguments to justify their rents, claiming that their personal convenience is society's obligation.

I'm greatly enjoying watching these feral predators starve.

Revision
I should have stated: In the absence of First Principles, morality is the difference between personal convenience and social obligation.

Good post - eom
eom

Blame Mao
This disequilibrium is the fault of Mao, the communists and the Indian politicians that decided to follow the soviet model. If economic freedom is not reduced India and China Eventually the wages there will rise putting upward pressure on wages in the industrialized countries and squeezing the returns on capital.






BTW he biggest winner lately is not China or India but tax haven Irland...
...by lowering corporate taxs to 12% Irland has becoem rich.


No Subject
The problem is not globablization it's free trade which allows those with more resources to exploit those with less resources as opposed to fair trade which seeks to limmit the degree to which a people may be exploited.

Rising inequality
One can make the case for the fact of rising inequality by staying entirely inside our own borders. As has been pointed out by Andrew Sum, of the Center for Labor Market Studies, nonfarm labor productivity rose between 2000 and 2006 by an impressive 18 percent. Yet during that period the wages of the American laborers who made that increase possible rose by not quite one percent.

Someone is making a lot of money off American labor. And it's not the employees.

I agree
More specifically, the problem with globalization is that it allows those with more capital to exploit those with only resources.

Take Nigeria, for instance. It's resource rich but capital poor. So foreign capital comes in to extract the resource while being required to add nothing to the local economy other than massive bribes and assistance to the army and police. Thus they are permitted to leave the premises horribly polluted and the people none the richer. In fact the people, being mostly fishermen and subsistence farmers in that area, have been harmed to the point of destitution from the pollution that has killed both land and sea.

So resource-rich Nigeria loses, while the corporations extracting the oil gain, in a deal that is virtually all profit for the investor.

Yes Roy
As I say in the piece: we expect, as a result of globalization, that wages for US workers will fall, or, at least, not rise as fast as they otherwise would.
You have just pointed out that wages for American workers are not rising as fast as the rise in productivity would have us expect.
The point of my piece was to say why this is happening. Globalization.
To take the next step: is this a good or a bad thing? Obiviously, not a good thing for American workers, but it is a good thing for the poor in other countries.
Again, as I say, your view of whether that is a good bargain or a bad one is up to you. I've given my view.

poor get poorer
Tim is obviously not among the poor or working class in the US, otherwise this giveaway would not suit him so well. The other countries can do the same as the US did to start--treat their countrymen justly. Now the US is treating its countrymen unjustly by encouraging the giveaway of assets from the US middle class--from my 4 children and, so far, 1 grandson--to give the assets to a foreigner. That is just evil. If the foreigner wants to prosper in his own country, my children do not need to give away to him--he can build his own economy just as my parents and grandparents built this economy.

Relative poverty
One of the mantras of modern progressives is that "the [US] poor have gotten poorer and the rich richer". Yet government has over time changed the official definition of who is poor. Certainly our government's defined poor have far more than the poor in Sub-Sahara, West Africa, or Somalia. Even though China and India have grown their economies none of our poor if they knew how the lower middle class lived in either country would chose to live there.

Americans defined by our government as poor qualify for Medicaid, access to a daily ration of food, have electricity, sewer and clean water, more than one change of clothes, and probably have a car, TV, radio, hand held devices and a telephone. What percentage of the population of Indian and China have any of those things without great daily effort on their part just for the basics.

I attended a university cocktail party some years ago. In attendance was a Brazilian professor as well as several supposedly well educated but obviously naive graduate students. I was standing and talking with the Brazilian about what his country was doing to protect the environment when a group of graduate students came over to meet him. Before our conversation could resume the graduate students were verbally attacking the Brazilian for "his country's destruction of the rain forest". He calmly shot back, "how can North Americans be so arrogant after their ancestors cut down the two largest temperate forest in the history of the earth?" The graduate student's went away sputtering.

The Brazilian then said, "you know the actual point is that most Americans miss is that even the poorest of you are spoiled compared to the poor in Brazil. If you had to worry about where you will sleep safely tonight or get your next meal you really don't have time worry about the long term, like environmental activism."

Richest 'poor'
There is something wrong when the poor are becoming obese and the rich are anorexic.

So what if millionares or billionares are buying yachts or gold plated bath tubs and toilets?

Someone had to build the yacht or plate the toilet.

What should really matter is how many people have shelter, have clean water and food supply and can sustaine themselves and have an opportunity to earn more.

If a a million people earn earn a million dollars each pulling a billion people up to that plateu, what is wrong with that?

Heat of vaporization
This reminds me of the the heat of vaporization (or fusion) in water.

Starting with water at freezing, adding heat at a constant rate will cause a rise in temperature.

Once it reaches 100C, more heat will not raise the temperature until engough heat is applied to cause the water to boil.

I think of the world economy is similar. Once most of the world acheives 'middle class', the next major growth can begin (into space?)

damn straight!
because foreigners aren't really people are they, i mean they're certainly not our people so why should we care. am i right? we really need to think long and hard about giving away the future of our children to evil starving foreigners...

non-sequitor
first you say they're paying massive bribes and assistance to the army and police and then you say they don't contribute anything. the problem isn't that capital is exploting resources, they are being paid for. the problem is the institutions in Nigeria, government driven by graft, corecion, and corruption is naturally going to work this way. blaming it on glabalization is stupid, take the foreign capitol out of the equation and what have you got? a bunch of normal working class people being exploted by their own army and police, just like now.

What?
What is the US taking from you and your children?

I live in the suburbs of Grand Rapids, MI. They completely surround the city. All the houses in this band are between 200K and 400K. In Michigan the unemployment rate is 7%... much higher than the national average. This scenario must be playing out pretty much everywhere. I would posit that if you live in a 200K+ house you are middle class.

The only people taking an unreasonable amount from me is the government. Thank god for the cheap goods from foreigners that allow me such a nice standard of living. Now if only we'd let them come and clean my house and mow my grass. Oh and home maintenance too...
I have a whole laundry list of things they could do.

Rising inequality
There is no morality in continuing a policy that is stripping our country of its industrial capabilities. Nor is there any morality in pushing the middle class and the lower middle class down the economic ladder by the choice of so-called elites.

This link is to a story we will all become familiar with as time passes.

http://www.msnbc.msn.com/id/16960673/site/newsweek/

Inequality and morality
Those who believe that the definition of morality is complete equality are bound to see this trend as a problem.

However, such a definition (which is really the essence of socialism) cannot sustain itself.

It has always been
This is nothing new. How is business any different? If I tried to make a new car company would GM be exploiting me simply because they have greater resources. It is not free trade that exploits, it is the lack of free trade meaning that nations that have corrupt governments allow the peoples to be exploited. Taiwan is a excellent example. They are a small nation yet do very well. Surely they have not the resources we do. They thrive because they are industrious, educated and understand market economies. Rather than erecting barriers to trade perhaps we should do more to insure free trade?

Define fair trade?

Corruption
This is not a failure of free trade, it is a failure of the Nigerian government to act in the best interest of the people. In fact, perhaps if Nigeria had a private oil firm like Exxon they would do quite well as opposed to a typically corrupt state?

Global trade is inevitable. There are ways nations can trade freely without all the ills you point out.

What do you suggest?

Fixed value
If we take a snapshot of the world's economy and assign it some value is it safe to assume then that as globalization progresses we are essentially seeing a redistribution of wealth by natural market forces?

Is not wealth redistribution a liberal ideal? If so then are we not globalizing the liberal icon? Perhaps this shows how the market prevails as opposed to government attempts at the same. Does this show the failure of the socialist ideal?

How does Reagans view that a rising tide lifts all boats play into this? Perhaps the left need admit he was right?

Finally, as to wages, if globalization enlarges the markets for goods and services as sell as production capability perhaps the cost of goods sold will fall and the lower wages are offset, as we have seen by cheap consumer goods, by lower prices?

Who may be called a liberal?
I'm not sure I follow the last line. Liberal or conservative, I'm don't think American politicians have any obligation to put India's working class above their own. Even politicians who are categorized as "liberal" only exist to represent *American* citizens. To say that they are not "liberal" in a classical sense is to combat a straw man--politicians aren't responsible to abstract concepts, they're responsible to people. In other words, I think that liberalism in America exists within a democracy that in some ways restricts its operation, but that fact doesn't render it a void concept.

As for "or otherwise," suffice it to say that even if failing to support globalization was illiberal, I doubt it would be considered a disqualifying offense.

What?
Sorry, your comment doesn't make a lick of sense. Are you endorsing police states as being good for the country involved, because American investment money shores up the agencies of repression?

A company that pollutes because it can, and saves money by bribing venal politicians while it poisons the environment, is contemptible beyond words. They know better. Yet they decide it's cheaper to hire local armies to murder those who complain. And you hail it as a sound business decision, giving needed income to the desperate wretches they hire for "security" against the other desperate wretches.

Your mention of "normal working class people" is poorly written. Who are you referring to? And in connection with what?

Ireland told taxes too low.
"The official recommendation called on Ireland to ditch its plans for tax cuts and spending increases, to "remove the inconsistency with the broad economic guidelines of the economic policies, endangered by the budget plans for 2001"."

http://news.bbc.co.uk/2/hi/business/1165858.stm

See what happens when you are successful?

As usual non-economists look at the short-term equilibrium
If you use the "one dollar one vote" rule and use the theoretically invalid community indifference curves then you can make an argument that free trade is a net benefit.


In reality free trade can be a net negative to developed nations in the long-run.


1) The equalization of wages actually discourages the type of technical innovations that would have made American workers more productive.
.........................................................................................................................................................................................

2) 300,000,000 in income to one individual does not cause the same amount of welfare (Kahneman) as the same income earned by 10,000 individuals. Money has a steeply declining utility. This effects become more pronounced in the long term.
.......................................................................................................................................................................................

3) Income inequality typically increases crime, disease, socialist politics and inefficient use of labor.
................................................................................................................................................................................................
.
Question: What nation was the biggest practitioner of free trade in the 19th century?

Answer: The UK.

What was the result of this trade? A reduction in British wages (for unskilled labor) that caused British immigration and in the long-term REDUCED British output.

.................................................................................................................................................
IN the US the birth rate is declining quickly among natives because of declining real wages for the lower 40% of workers.

The Feds and States are Chasing the Money Away
What I said is that government at all levels is chasing capital out of their jurisdictions by grabbing too much of it. You can see this play out even between counties in the same state, although the case I remember best is when the infinitely wise progressive politicians of the State of Washington (my state) decided to put the screws to Boeing, who replied, "Screw you, Washington" and moved to Illinois, taking some 20,000 jobs with them. You gotta love politicians when they decide to give up wise governance and go into the protection rackets. But who protects us from them?

Globalization does. See, when government chases capital out of the country, it also chases out jobs, profits and economic opportunity. Folks may respond by either voting for more progressivism - a psuedonym for government-run protection rackets - less progressivism, or the status quo. But only less progressivism brings the capital back to the country, because after all, there's no worker better than the American worker, no investor better than the American investor, no entrepreneur better than the American entrepreneur. Unfortunately for us, there's also no thug worse than the American politician.

Exhibit A: Congressthug extrordinaire Barney Frank, who recently held a gun to America's head, stating, "Fork over the cash to my constituents, or I pull the trigger on legislation that will turn you inside out and shake loose your every dime." And the media response? They lauded him not as a despicable shakedown artist, but as America's foremost statesman on the domestic stage.

So it would seem no one gets it, hamilton, including you. There's a severe cost for politically abusing capital: It goes elswhere, leaving the politicians and their rent-seeking constituents high and dry. But then, it was never really your money in the first place, was it?

Cheers.

wrong on all counts - - -
Rarely have I seen such a series of unsupportable assertions. Like the mosquito in the nudist colony, I hardly know which fish in the barrel to shoot first. How about that for mangled metaphors?

Back to basics. People of good will naturally hold to two mutually contradictory noble concepts; freedom and equality. Equality is a private virtue and a public vice.

Politicians and dictators of all sorts maintain their power-grabs and sinecures by falsely claiming to rule in the name of the "poor" and equality.

Freedom disempowers dictators and politicians, alike, while raising the welfare of the community, albeit "unequally". Human nature is manifestly charitable and this private virtue moderates inequality, much more efficiently than coerced public charity ever could, or did.

Like it or not, leftys and "liberals", the poor really do need millionaires and inequality to enable themselves to rise out of poverty as individuals and as a class.

interesting thought process there
Someone taking a job for less than you want to earn, is the US giving away assets.

giving people a job is exploiting them?
So you honestly believe that the people were better off before those evil foreigners built factories for them to work in.

And how are the Nigerians supposed to build mines and factories without capital?
As I remember, your the guy who waxed poetic about the marvels of subsitance farming.

At least you are consistent.

fair trades mean that unions don't have to worry about competition
...

why do you only look at cash wages?
Is it because you know that telling the whole truth destroys your point?

some of the increase goes to reduced prices
...

industrial capacity
1) Our industrial capacity isn't falling all that fast.
Industrial employment is, that's because of rising automation.

2) Do you honestly believe that the only way to create wealth is on the factory floor?

rising tides
that quote originally came from St. Kennedy the John.

This is not investment
Let's not wax poetic over how investment money is flowing into Nigeria and stimulating all sorts of wondrous things. It isn't.

You know and I know not one dime of investment money is coming into Nigeria. It's only fuelling an extractive industry. Investment money stimulates Americans (and Europeans) to come in to extract the wealth of the country, leaving only a monumental cleanup task behind as they just spread their wastes in places where millions of people are trying to make a living.

The ONLY spinoff to the benefit of any Nigerian is the stupendous bribes that some politicians get. And the hire of private security services to keep the people of the country from tearing oil installations apart.

This faux "investment" is nothing that benefits Nigerians. It only impoverishes them all the more. At least before oil came they could fish in a clean Delta. Now they can't fish, they can't farm on the poisoned land, and they don't even get the opportunity to work in the oil industry.

Why not look up the numbers to see how many Nigerians get to work on the platforms?

The loss of the middle class
"Once most of the world acheives 'middle class', the next major growth can begin (into space?)"

How exactly is this supposed to happen? Under our current system we are losing our middle class-- as the gulf between the investor class and the working class widens.

If we return to policies that stimulate the expansion of the middle class, we have to return to the policies of the New Deal. The forties, fifties and sixties were the time the middle class was expanding. You know... the Great Society?

The shell game
Once again, Mark: in the past six years our productivity has increased by an impressive 18 percent. Automation has threatened our jobs and American workers have stepped up to the plate.

Of that amount, only one percent has passed through to the workers who created that wealth, in the form of wages. We created the miracle. And we haven't been paid for it yet.

Remaining factory workers are more highly skilled than ever before. We produce more than we ever have before. And we get paid exactly the same as we did before.

Define the middle class
Do you consider the middle class to be 1 or 2 standard deviations of a normal distribution?

Is it a bad thing if the standard deviation is growing and the median value is increasing?

man roy, you really do work overtime to display your ignorance
So the money that flows into Nigeria to build mines and factories and such, isn't investment.

Why?

Because you are upset that the Nigerian people aren't getting 100% of the profits. So to you, it's exploitation.

I guess you think that the Nigerian people were better off herding their cattle and living on the edge of starvation.

On the other hand, you have made that exact claim in regards to Mexicans.

How many times are you going to repeat that lie?
You are not factoring in all of the other costs of employment.

You want to pretend that the only cost of employment is the cash wage paid directly to the employee.

Beyond, that even the 1% claim is the result of bogus statistics.

Inequality is rising all over world.
Some people think inequality is rising because of goblization.I donot think so. GOBLIZATION IS BRAINCHILD OF NEW TECHNOLOGY. My argument is people are not change their attitude with time. Iam staying in India, today lots of farmers are suiciding in all part of India.
All farmer want to B.T cotton in their field, B.T . Cotton give six time more production, but most farmer are eneducated they donot know how to take care of this new technology of production of B.T. cotton, they purchase in higher price seed of this cotton but failed to take care so they are in loss and so they suicide.
MORAL LESSION IS YOU MUST CHANGE WITH NEW TECHNOLOGY

You mean prices
Prices are staying about the same for food. Prices are dropping for cheap consumer goods from overseas. And prices for the most important things, like homes, services and health care, are rapidly rising.

The net difference? Households are drawing down whatever remains of their savings to the point where for the first time since 1933 we have a negative savings rate. We are having to spend $1.01 for every dollar we earn just to stay afloat.

Prices of important things, like homes, services and health care, are rapidly rising.
Home prices have risen due to local slow growth policies and other local government policies and loose monetary policy. After all many tradesmen (blue collar working men) could build their own homes. BTW despite all this home ownership is higher than ever before.

Services are mostly wages not profits except in licensed industries where government and professions get together to limit competition. Roy please name the services that are getting more expensive so we can debate weather the profits are going to the investor class or the workers and why. BTW it is easy to be an investor today.

Healthcare prices are not rising for what you get, people feel compelled to spend more but not due to rising prices. Almost all drug prices fall dramatically when the patents run out.

Prices of important things, like homes, services and health care, are rapidly rising.
Home prices have risen due to local slow growth policies and other local government policies and loose monetary policy. After all many tradesmen (blue collar working men) could build their own homes. BTW despite all this home ownership is higher than ever before.

Services are mostly wages not profits except in licensed industries where government and professions get together to limit competition. Roy please name the services that are getting more expensive so we can debate weather the profits are going to the investor class or the workers and why. BTW it is easy to be an investor today.

Healthcare prices are not rising for what you get, people feel compelled to spend more but not due to rising prices. Almost all drug prices fall dramatically when the patents run out.

we've been around this bush at least three times before
though I'm not surprised at your unwillingness to remember what you were showed before. Dealing with facts does make it awful hard to believe in your favorite myths.

The cash wage is only a part of what a person is paid. There are many other things, life, health and unemployment insurance for a start.

That some households are drawing down their savings to buy things they don't need, is beyond dispute.

Ignoring the Basics
There are a few basics which most have ignored.

Predatory businesses can not succeed without the aid of government.
There are many examples of this practice in this country and the government giving it "the blind eye"

A people who breed indiscriminately will soon outstrip the ability for the land to support them and for them to be able to care for themselves unless someone "out of kindness" interferes and gives them one more generation in which to multiply their problem ten fold. I can just see the pants dirting that will come from that statement. If those who think that this is so brutal, then they need to travel the world and OPEN their eyes.
Wherever the people have been "rescued" with emergency food and medicine, the people have just increased the number of surviving children so that the next generation will be (in one instance for example) hanging from ropes on the mountain side trying to grow enough food to prevent starvation. You would think that would give them pause for thought, but apparently it doesn't even slow them down because they will tell you that "your not even a man if you have less than ten ‘living' children plus a child who has died and is in heaven watching over you".

So if you think you can help them through food and medicine, you are dead wrong, and all you will do is compound their misery. We are in a battle far beyond the capabilities of man, but we can not bring ourselves to recognize the foundation of the problem and to address that problem.

Going on to another group and looking at their problems. Have any of you traveled the back roads of Mexico? If you have, you saw the basic problem, did you recognize what it was that was right in front of your eyes? You say that you are going to "raise their standard of living, and that will in turn cure all their problems" Wrong again, it was attitude which put them in the mess they are in, and if you don't change the over 3 generations of programming by the world industrialists who brought them Communism (a means for supplying a never ending supply of slaves) you will just compound their problems while making yourself feel good because you went for the easy "solution". If you want to help those people why do you encourage them to use an arcane language of pseudo Spanish. The world language of trade is English, like it or not. Being "kind" to them and not insisting that they learn the language of commerce guarantees their life of slavery.

What's in it for the locals?
"I guess you think that the Nigerian people were better off herding their cattle and living on the edge of starvation."

Nigerians would be best off if their government encouraged a legal environment where foreign investors could undertake businesses in partnership with Nigerians. A 50-50 law would be a good one.

But that's not happening. What little foreign investment there is in that country has to do with extractive industries. And all profits tend to be repatriated to the investors' home countries, leaving Nigerians none the richer. Plus, they have the mess the multinationals leave behind to clean up on their own dime.

Name one single enterprise in Nigeria that employs reasonable numbers of local Nigerians in good jobs-- not native bearers doing the shovel work for the bwana devils. I don't think you can do it. What money there is in that country is only there to wrong out profits and bring them home again.

If Nigerians could only have stayed with subsistence farming and not been exploited by the oil companies they would be in much better shape today than they actually are. Foreign investment has made their lot worse.

You never give up, do you?
"Beyond, that even the 1% claim is the result of bogus statistics."

We are supposed to presume you have even glanced at the statistics-- which of course you have not. It's just a reflex with you to claim expertise without any factual foundation.

So which part do you disagree with? The part where our nonfarm labor productivity (output per work hour) has grown 18% in the past six years? I think you'll have to dispute Ben Bernanke on that one.

Or is it that real hourly wages have only grown by one percent during that same period?

In either case, provide support for your assertion and I'll be happy to consider it. Until then I think Bernanke knows a bit more about it than you do.

Reagan
I just listened to a 1964 speech by Ronald Reagan. It was amazing. Where is someone like him today? They are all pathetic, especially the left. If I have to listen to Hillary screech for 8 years+ I think I will go utterly insane.

TCS Daily Archives