The entire essay obsesses over GDP convergence while ignoring that GDP (especially in the West) increasingly measures asset shuffling, imputed rents, and healthcare billing rather than anything humans actually experience. (Healthcare, finance, real estate, and legal services combined are ~40% of US GDP!)
So we've got 3000 words eulogizing a metric that tells you more about financialization than flourishing. Look at life expectancy, infant mortality, or caloric intake and you'll find a more interesting story -- with some poor countries doing very well, and increasingly so, whereas others are on a fairly grim trajectory.
US tourists spend $177B per year abroad. When they spend their money in other countries[0], they surely experience the benefit.
The universal experience of Americans visiting Japan: how is such a developed place so affordable? Then they think Japan must do something exceptionally excellent. But the truth is it feels weirdly affordable because they are spending their American salary there.
Edit to add: point being that a weak correlation, even if it is indisputably real, leaves a lot of room for other factors to be operative when it comes to particular differences.
I notice that the two most obvious outliers for low GDP high life expectancy countries are North Korea and Syria, and the low GDP low life expectancy outliers are three African petrostates.
My interpretation is that this confirms both points. Yes, petrostates with concentrated wealth, states with dubious truthfulness, and those ravaged by war are all cases where GDP doesn't tell the full story. I'm not sure that tells us GDP is useless when applied to where most HN users live, though.
Healthcare is far more than just billing. Healthcare is why I didn't have a heart attack (two stents in my heart). It's why I didn't go blind (cataracts). It's stuff that I directly benefit from.
Yes, but also political stability and rule of law. It doesn’t have to be “rule of law” in the sense of liberal democracy. But it has to be reasonably fair and predictable for routine business issues. That’s one thing China has focused a lot on that doesn’t get mentioned much. Apart from politically charged topics or pillars of their industrial policy, you actually can get a relatively fair shake from Chinese courts these days.
Classic example of economic theory managing to dress up a kind of ahistorical theology as respectable science.
Consider this: if you take 'countries' as given (questionable), and some become rich whereas others remain or become poor, by induction you'd expect those trends to continue. A country that has remained poor for decades is likely to remain poor for decades, etc. "Bad governments" and other conditions that create poverty are not some kind of mean-reverting aberration.
The economists will carry on though, and thanks to their connections with finance and government, their prestige will never truly wink out.
I assume someone somewhere has a dataset for technology diffusion broken out by country or at least region? Like so[1], but as a table and not limited to just here.
Perhaps that sort of thing could be useful enough to justify the extra bytes?
If the modern right's obsession with "ivory tower academics" was real instead of a stick with which to beat ideas they don't like, the field they'd focus on would be economics, not gender studies. Most of it is astrology for those who like to wear suits. It has been decades since the complexity and chaos factor of the real world has overtaken the ability to make meaningful correlations or predictions in all but the most straightforward cases where one institute (e.g. a central bank) controls everything.
It's made even worse by the great bias towards "everything about globalism and capitalism is obviously fantastic for the world!".
This case is such a prime example of both of the above. Firstly, the one-off China event having such a big impact on its own that general theories are entirely irrelevant. Second, of course
> "Now that those were swept away—they were, he said, merely a “temporary phenomenon”—the catch-up growth that economic theory predicted had finally arrived. Globalization was working; development was succeeding; the gap between rich and poor countries was closing.
Nice article! The upshot is that the boom of Chinese commodity prices in the mid-2010s is what stopped poor countries from catching up. That's a high level answer, but there's more nuance to it. In many places, I firmly believe the poor governance added with unnecessary bureaucracy is how half the countries lose sight on development. The prime example is India and to some extent Brazil.
It’s a graph of regional GDP per capita as a percentage of the U.S. Latin America was around 40% around 1950, but has declined to around 25% by 2018. Sub-saharan africa has slowly lost ground since 1950. Southeast asia has gone from almost as poor as Africa in 1950 to almost as rich as southern europe (50% of US GDP per capita).
What makes some countries rich and some countries poor? In the modern era, I think political dysfunction explains a lot. Developing countries with neoliberal governments that started out authoritarian (Singapore, Korea, Taiwan) have done well. Countries that can’t maintain a stable government have suffered.
In my home country, they were experiencing 5-6% per capita GDP growth for about 15 years: https://www.gisreportsonline.com/wp-content/uploads/2020/12/.... But then a motley coalition of idealistic students and Islamists overthrew the government. I suspect that will lead to a lengthy period of slow growth, because who wants to invest in a country where people regularly overthrow the government?
Hasina had gone nuts and was torturing people. I don’t think people are gonna wanna invest in a country where someone like that is in charge plus Adani already has them over a barrel.
China does that and people are fine investing there. Bangladesh isn’t Vermont, you can’t apply the same rules. However many people Hasina killed will pale in comparison to the excess child deaths that will result from interrupting GDP growth.
"What if it was just China?" is a reasonable guess for many of the dazzling claims of statistical worldwide improvement made by Steven Pinker/Noah Smith and their ilk
That's what always surprised me about the whole concept of BRICS nations. Those countries have more interest in competing with each other to get access to other markets than to work/stick together in any way.
What I don't understand is the concept of NATO or the EU: why would a group of countries willingly band together as "happy vassals," as the Belgian PM put it.
But even if "it was just China", it doesn't disprove the core fact that the world is getting better. China is almost 20% of the world by population, and its development has brought hundreds of millions of people out of poverty.
Plus, it might be possible for other countries to emulate China and similarly grow.
Catch up growth is premised on the assumption that productivity producing innovations diffuse through the world. This assumption is true, of course, but not universally. Many technologies also rely on culture, institutions, human capital.
> [...] three factors [...] Capital accumulation is one.
The obvious omission here is well developed in Imperialism, The Highest Stage of Capitalism: it's hard to accumulate capital when all of the productivity growth from foreign "investment" by the rich world is captured by the "investors".
Is it against the rules to say that most of the comments here (at least right now) are drastically missing the point? "Rich countries exploit poor ones!!" - ok, fine, you could argue that's been happening since the beginning of time, doesn't change anything about the conclusions of the article. "The article obsesses over GDP convergence!!" - you can argue GDP is not the perfect metric but the fact is a lot of these poor countries have not been converging on lots of quality of life metrics that matter.
The fundamental thrust of the article is that poor countries only "converged" for a short while due to the Chinese-driven commodity boom, and I think this argument is very compelling. Worse, as history has shown tons of times, commodity booms often end up being bad for a country in the long term because they don't lead to meaningful investments in other productivity-improving endeavors (e.g. Dutch disease that the article mentions).
And I think a subtext of this article is that the economic profession in general has a ton of soul searching to do. Too often economics has depicted rosy outcomes for a host of activities where it has just been flat out wrong. This article goes into detail about how "convergence" almost never happened except for a short "sugar high" driven my Chinese commodity demand. Similarly, I've seen a few mea culpas over the years arguing that the once orthodox view that globalization would be great for everyone failed to take into account how it could contribute to destabilizing democracies as the "economic losers" in rich countries started to demand more political power, one aspect in the rise of populism and some of its dangerous effects.
> the fact is a lot of these poor countries have not been converging on lots of quality of life metrics that matter
What kinds of measurements are you referring to? Because poor countries are absurdly clearly converging since the end of WWII, but only if you don't ignore things like political independence, lack of civil wars, lack of state sponsored terror, or food security.
Those things contribute less to the GDP than fridges that break every 4 years.
Anyway, yes, there is some serious discussion on whether that process has stopped. This article isn't very good, the source it's extending from isn't trying to compare actual wealth, but still something may have happened recently.
And yes, it's probably the culprit everybody suspects, and economists should be louder in recognizing that some of their schools are in fact fraudulent.
Our current world system is based on exploitation by the powerful on the weak. It has been this way since the dawn of time at many levels. So now, powerful countries take resources from less powerful countries. There are many ways this can be done, so here we are.
So true. There is a full powerful - weak spectrum. Those not at the top or bottom, in-between ones, turn a blind eye to this and accept it as a harsh reality of nature, enjoying spoils of this chain in the process. Worse, become servile to those above them and ruthless to those below. And as if this were not enough, doors of fashion philanthropy also open up for them!
Who did Singapore exploit to get rich? Taiwan? Korea?
You could be forgiven for believing that if we didn’t have literal real-world experiments in the 20th century where countries went from dirt poor to rich without doing any of the shit you think makes countries rich.
What’s most offensive about your virtue signaling is that it helps keep people poor. If we had kids in college studying how Lee Kuan Yew systematically made his country rich, instead of studying fucking socialism, you’d save literally millions of lives.
A huge fraction of that assistance (e.g. the IMF) has been conditioned on opening up their economies to "fair" foreign exploitation. It's not some benevolent gift, generally.
Outsourcing worked while we didnt have AI to the level we needed
It was always gonna be a temporary stopgap. Sorry, the global community doesnt have enough empathy for humans THAT far away to actually share wealth w them. At least we graduated to having social safety nets within nations.
“Sharing wealth” is an idea that has millions of children’s blood all over it. It’s a recipe for keeping countries poor and backwards, so children die of disease, hunger, and political instability.
When my dad was born in a village in the British Dominion of Pakistan, India/Bangladesh/Pakistan and Singapore were similarly poor. Nehru went to Cambridge and learned about socialism. Lee Kuan Yew went to Cambridge and learned about capitalism and high-trust British people: https://youtu.be/b_6H26fpZp8
The rest is history. Singaporeans now get to stay in their home country, while desis flee to Anglo countries to escape the society Nehru and their grandparents created.
Waiting for Europeans to give you money is a loser mentality, and people peddling that mentality in the name of “empathy” are causing harm. What the third world needs from Europe is the social and political technology that Europe itself used to become rich. That’s what people like LKY understood that so many third world leaders failed to learn.
you most certainly want to watch this one about india since you brought it into the conversation https://www.youtube.com/watch?v=LveXy5VBGUc india is not a poor country anymore
> In the past, he said, poor countries were failing to outgrow rich ones because of unfortunate circumstances (“the war, bad policies, and dysfunctional institutions that afflicted developing nations in the mid-20th century”)
Or is it the wealthy exploiting the poor through low wages?
They’re not exploiting them, it is a function of not having really strong safety nets or even UBI.
So a lot of people are desperate to survive and keep a roof over their head.
And technology makes money flow upwards to the rich and corporations.
Soon with AI employment is going to become pity-employment. Make-work jobs. Because people just can’t seem to trust other people to be charge of their own time and have free money. Overton window in USA is not there yet. So capital will find ridiculous ways to exploit labor via the desperation of the masses. Maybe gig economies and race to the bottom for service providers as out-of-work people flood the market with useless crap, who knows.
The entire essay obsesses over GDP convergence while ignoring that GDP (especially in the West) increasingly measures asset shuffling, imputed rents, and healthcare billing rather than anything humans actually experience. (Healthcare, finance, real estate, and legal services combined are ~40% of US GDP!)
So we've got 3000 words eulogizing a metric that tells you more about financialization than flourishing. Look at life expectancy, infant mortality, or caloric intake and you'll find a more interesting story -- with some poor countries doing very well, and increasingly so, whereas others are on a fairly grim trajectory.
US tourists spend $177B per year abroad. When they spend their money in other countries[0], they surely experience the benefit.
The universal experience of Americans visiting Japan: how is such a developed place so affordable? Then they think Japan must do something exceptionally excellent. But the truth is it feels weirdly affordable because they are spending their American salary there.
[0]: https://en.wikipedia.org/wiki/World_Tourism_rankings#:~:text...
GDP per capita is highly correlated with metrics like infant mortality.
Life expectancy vs GDP per capita: https://ourworldindata.org/grapher/life-expectancy-vs-gdp-pe...
I don't have an R^2, but clear to me that it's far from one.
Likewise for infant mortality rate: https://ourworldindata.org/grapher/child-mortality-gdp-per-c...
Edit to add: point being that a weak correlation, even if it is indisputably real, leaves a lot of room for other factors to be operative when it comes to particular differences.
I notice that the two most obvious outliers for low GDP high life expectancy countries are North Korea and Syria, and the low GDP low life expectancy outliers are three African petrostates.
My interpretation is that this confirms both points. Yes, petrostates with concentrated wealth, states with dubious truthfulness, and those ravaged by war are all cases where GDP doesn't tell the full story. I'm not sure that tells us GDP is useless when applied to where most HN users live, though.
What does it look like if you separate out east asians and remove countries with an inflated GDP per capita from resource exports (like Botswana)?
It looks like cherry picking.
Which makes it even more interesting when the two highly correlated metrics are moving in different directions relatively.
Though if you use us as a data point, seems like it goes down if you get too high
"Healthcare, finance, real estate, and legal services combined are ~40% of US GDP!"
Healthcare is more properly medical care. There's very little health care or wellness preservation compared to treatment and repair.
I would argue that legal services are more care-like, but there is a fair amount of treatment and repair.
Healthcare is far more than just billing. Healthcare is why I didn't have a heart attack (two stents in my heart). It's why I didn't go blind (cataracts). It's stuff that I directly benefit from.
A long essay, which ignored the elephant in the room.
Prosperity and growth come from free markets. The correlation is very strong. Poor countries are poor because they eschew free markets.
Yes, but also political stability and rule of law. It doesn’t have to be “rule of law” in the sense of liberal democracy. But it has to be reasonably fair and predictable for routine business issues. That’s one thing China has focused a lot on that doesn’t get mentioned much. Apart from politically charged topics or pillars of their industrial policy, you actually can get a relatively fair shake from Chinese courts these days.
Classic example of economic theory managing to dress up a kind of ahistorical theology as respectable science.
Consider this: if you take 'countries' as given (questionable), and some become rich whereas others remain or become poor, by induction you'd expect those trends to continue. A country that has remained poor for decades is likely to remain poor for decades, etc. "Bad governments" and other conditions that create poverty are not some kind of mean-reverting aberration.
The economists will carry on though, and thanks to their connections with finance and government, their prestige will never truly wink out.
I assume someone somewhere has a dataset for technology diffusion broken out by country or at least region? Like so[1], but as a table and not limited to just here.
Perhaps that sort of thing could be useful enough to justify the extra bytes?
[1] https://techliberation.com/2009/05/28/on-measuring-technolog...
If the modern right's obsession with "ivory tower academics" was real instead of a stick with which to beat ideas they don't like, the field they'd focus on would be economics, not gender studies. Most of it is astrology for those who like to wear suits. It has been decades since the complexity and chaos factor of the real world has overtaken the ability to make meaningful correlations or predictions in all but the most straightforward cases where one institute (e.g. a central bank) controls everything.
It's made even worse by the great bias towards "everything about globalism and capitalism is obviously fantastic for the world!".
This case is such a prime example of both of the above. Firstly, the one-off China event having such a big impact on its own that general theories are entirely irrelevant. Second, of course
> "Now that those were swept away—they were, he said, merely a “temporary phenomenon”—the catch-up growth that economic theory predicted had finally arrived. Globalization was working; development was succeeding; the gap between rich and poor countries was closing.
Nice article! The upshot is that the boom of Chinese commodity prices in the mid-2010s is what stopped poor countries from catching up. That's a high level answer, but there's more nuance to it. In many places, I firmly believe the poor governance added with unnecessary bureaucracy is how half the countries lose sight on development. The prime example is India and to some extent Brazil.
Social sciences departments around the world should be working overtime to explain this graph: https://www.gisreportsonline.com/wp-content/uploads/2020/12/...
It’s a graph of regional GDP per capita as a percentage of the U.S. Latin America was around 40% around 1950, but has declined to around 25% by 2018. Sub-saharan africa has slowly lost ground since 1950. Southeast asia has gone from almost as poor as Africa in 1950 to almost as rich as southern europe (50% of US GDP per capita).
What makes some countries rich and some countries poor? In the modern era, I think political dysfunction explains a lot. Developing countries with neoliberal governments that started out authoritarian (Singapore, Korea, Taiwan) have done well. Countries that can’t maintain a stable government have suffered.
In my home country, they were experiencing 5-6% per capita GDP growth for about 15 years: https://www.gisreportsonline.com/wp-content/uploads/2020/12/.... But then a motley coalition of idealistic students and Islamists overthrew the government. I suspect that will lead to a lengthy period of slow growth, because who wants to invest in a country where people regularly overthrow the government?
> The owner of this website (www.gisreportsonline.com) does not allow hotlinking to that resource
Sorry, coy “in my country” posting is one of my biggest online pet peeves. Why not just say that you mean Bangladesh?
I just say it so it doesn’t seem like I’m cherry picking a random example.
Hasina had gone nuts and was torturing people. I don’t think people are gonna wanna invest in a country where someone like that is in charge plus Adani already has them over a barrel.
China does that and people are fine investing there. Bangladesh isn’t Vermont, you can’t apply the same rules. However many people Hasina killed will pale in comparison to the excess child deaths that will result from interrupting GDP growth.
"What if it was just China?" is a reasonable guess for many of the dazzling claims of statistical worldwide improvement made by Steven Pinker/Noah Smith and their ilk
That's what always surprised me about the whole concept of BRICS nations. Those countries have more interest in competing with each other to get access to other markets than to work/stick together in any way.
What I don't understand is the concept of NATO or the EU: why would a group of countries willingly band together as "happy vassals," as the Belgian PM put it.
> Those countries have more interest in competing with each other to get access to other markets than to work/stick together in any way.
Access to markets isn't an exclusive asset. They don't compete over it, and mostly they can't compete over it, because they already have it.
But even if "it was just China", it doesn't disprove the core fact that the world is getting better. China is almost 20% of the world by population, and its development has brought hundreds of millions of people out of poverty.
Plus, it might be possible for other countries to emulate China and similarly grow.
Yes, typically what this would disprove is the thesis that neoliberal economics are what have led to the decline in global poverty
Maybe--I'm no expert.
But I'm pretty sure that neoliberal economics--particularly free trade--are what allowed China to rise so spectacularly.
Debunked by Steven Pinker:
https://whyevolutionistrue.com/2019/01/31/is-the-world-reall...
Debunked by Jason Hickel:
https://www.jasonhickel.org/blog/2019/2/3/pinker-and-global-...
Catch up growth is premised on the assumption that productivity producing innovations diffuse through the world. This assumption is true, of course, but not universally. Many technologies also rely on culture, institutions, human capital.
> [...] three factors [...] Capital accumulation is one.
The obvious omission here is well developed in Imperialism, The Highest Stage of Capitalism: it's hard to accumulate capital when all of the productivity growth from foreign "investment" by the rich world is captured by the "investors".
[delayed]
Is it against the rules to say that most of the comments here (at least right now) are drastically missing the point? "Rich countries exploit poor ones!!" - ok, fine, you could argue that's been happening since the beginning of time, doesn't change anything about the conclusions of the article. "The article obsesses over GDP convergence!!" - you can argue GDP is not the perfect metric but the fact is a lot of these poor countries have not been converging on lots of quality of life metrics that matter.
The fundamental thrust of the article is that poor countries only "converged" for a short while due to the Chinese-driven commodity boom, and I think this argument is very compelling. Worse, as history has shown tons of times, commodity booms often end up being bad for a country in the long term because they don't lead to meaningful investments in other productivity-improving endeavors (e.g. Dutch disease that the article mentions).
And I think a subtext of this article is that the economic profession in general has a ton of soul searching to do. Too often economics has depicted rosy outcomes for a host of activities where it has just been flat out wrong. This article goes into detail about how "convergence" almost never happened except for a short "sugar high" driven my Chinese commodity demand. Similarly, I've seen a few mea culpas over the years arguing that the once orthodox view that globalization would be great for everyone failed to take into account how it could contribute to destabilizing democracies as the "economic losers" in rich countries started to demand more political power, one aspect in the rise of populism and some of its dangerous effects.
> the fact is a lot of these poor countries have not been converging on lots of quality of life metrics that matter
What kinds of measurements are you referring to? Because poor countries are absurdly clearly converging since the end of WWII, but only if you don't ignore things like political independence, lack of civil wars, lack of state sponsored terror, or food security.
Those things contribute less to the GDP than fridges that break every 4 years.
Anyway, yes, there is some serious discussion on whether that process has stopped. This article isn't very good, the source it's extending from isn't trying to compare actual wealth, but still something may have happened recently.
And yes, it's probably the culprit everybody suspects, and economists should be louder in recognizing that some of their schools are in fact fraudulent.
Our current world system is based on exploitation by the powerful on the weak. It has been this way since the dawn of time at many levels. So now, powerful countries take resources from less powerful countries. There are many ways this can be done, so here we are.
I wonder if there is an example of a country that doesn’t have resources, so “powerful countries” cannot “take” them?
Or every country has resources, and weak countries are those that prefer to sell them for cheap rather than work on making use of them?
England, Japan, Singapore, South Korea, Switzerland, and Taiwan, etc. None of them have vast natural resources.
England had coal at the start of the Industrial Revolution.
So true. There is a full powerful - weak spectrum. Those not at the top or bottom, in-between ones, turn a blind eye to this and accept it as a harsh reality of nature, enjoying spoils of this chain in the process. Worse, become servile to those above them and ruthless to those below. And as if this were not enough, doors of fashion philanthropy also open up for them!
Who did Singapore exploit to get rich? Taiwan? Korea?
You could be forgiven for believing that if we didn’t have literal real-world experiments in the 20th century where countries went from dirt poor to rich without doing any of the shit you think makes countries rich.
What’s most offensive about your virtue signaling is that it helps keep people poor. If we had kids in college studying how Lee Kuan Yew systematically made his country rich, instead of studying fucking socialism, you’d save literally millions of lives.
this is cope. no continent has received more assistance than Africa. they are the opposite of exploited.
A huge fraction of that assistance (e.g. the IMF) has been conditioned on opening up their economies to "fair" foreign exploitation. It's not some benevolent gift, generally.
There's always an excuse.
Automation, d’oh
Outsourcing worked while we didnt have AI to the level we needed
It was always gonna be a temporary stopgap. Sorry, the global community doesnt have enough empathy for humans THAT far away to actually share wealth w them. At least we graduated to having social safety nets within nations.
“Sharing wealth” is an idea that has millions of children’s blood all over it. It’s a recipe for keeping countries poor and backwards, so children die of disease, hunger, and political instability.
When my dad was born in a village in the British Dominion of Pakistan, India/Bangladesh/Pakistan and Singapore were similarly poor. Nehru went to Cambridge and learned about socialism. Lee Kuan Yew went to Cambridge and learned about capitalism and high-trust British people: https://youtu.be/b_6H26fpZp8
The rest is history. Singaporeans now get to stay in their home country, while desis flee to Anglo countries to escape the society Nehru and their grandparents created.
Waiting for Europeans to give you money is a loser mentality, and people peddling that mentality in the name of “empathy” are causing harm. What the third world needs from Europe is the social and political technology that Europe itself used to become rich. That’s what people like LKY understood that so many third world leaders failed to learn.
you most certainly want to watch this one about india since you brought it into the conversation https://www.youtube.com/watch?v=LveXy5VBGUc india is not a poor country anymore
> In the past, he said, poor countries were failing to outgrow rich ones because of unfortunate circumstances (“the war, bad policies, and dysfunctional institutions that afflicted developing nations in the mid-20th century”)
Or is it the wealthy exploiting the poor through low wages?
They’re not exploiting them, it is a function of not having really strong safety nets or even UBI.
So a lot of people are desperate to survive and keep a roof over their head.
And technology makes money flow upwards to the rich and corporations.
Soon with AI employment is going to become pity-employment. Make-work jobs. Because people just can’t seem to trust other people to be charge of their own time and have free money. Overton window in USA is not there yet. So capital will find ridiculous ways to exploit labor via the desperation of the masses. Maybe gig economies and race to the bottom for service providers as out-of-work people flood the market with useless crap, who knows.