Gordon Campbell | Parliament TV | Parliament Today | News Video | Crime | Employers | Housing | Immigration | Legal | Local Govt. | Maori | Welfare | Unions | Youth | Search

 

How did we become wealthy?

How did we become wealthy?

Hugh Pavletich
Performance Urban Planning

16 December 2010

Within this fascinating interview Needed: An Economics for Grownups - National Review Online (via Arts & Letters Daily – note founder and editor Professor Denis Dutton honoured yesterday) , Professor Deidre McCloskey , Distinguished Professor of Economics, History, English and Communication of the University of Illinois at Chicago, discusses how the birth of the Industrial Revolution came about.

It started with the British and the Dutch some 300 years ago.

Professor McClosky’s latest book Bourgeois Dignity: Why Economics Can't Explain the Modern World has just been released – the second of likely six installments.

Solving the mysteries of the birth of the Industrial Revolution, has been the primary task and test of economic history. According to Professor McCloskey, modern economics to date has failed to explain this adequately – and because of this – economics has largely failed.

In her view, the major driver of the birth of the Industrial Revolution is speech. By extension – community attitudes.

At the beginning of the 18th century, people in the Netherland’s and Britain began talking about commerce as a good thing – a novelty at the time. They gave dignity to the bourgeoisie. And that drove capitalism, giving birth to the modern world.

The economist Angus Maddison, Historical GDP per capita statistics (XLS file – slow download) illustrate how human prosperity (for increasing numbers of the world’s population) has been like a hockey stick for 300 years over the span of the past 2000 years. A remarkable human achievement, over a short stretch of human history (about 12 generations).

As Professor McClosky notes, if this had not occurred, we would all still be on about $3 a day. She states –

“What changed was the sociology. That is what changed the attitude of the rest of society toward businesspeople, and with that new attitude came a change in government policy. It was suddenly all right – most clearly in the most bourgeois country on earth, the USA – to get rich and to innovate.”

Professor McCloskey makes it clear that the Global Financial Crisis is not the big issue of our time - but that the seismic changes in attitudes in China in 1978 and India in 1991 are the major modern events.

When asked her views on modern economics, Professor McCloskey responded –

“With alarm. But non economist intellectuals need to understand some elementary economics. There is no such thing as a free lunch, national income equals national product equals national expenditure, free trade is nice, more money causes inflation, governments are not all wise, spontaneous order is not chaos.”

“My alarm comes from the economists tendency to reduce humans to Maximum Utility machines. We need a humanomics, of the sort that Adam Smith and John Stuart Mills and John Maynard Keynes and Frederick Hayek and Gunnar Myrdal and Kenneth Boulding and Albert Hirshman practiced. Some current practitioners are Nancy Folbre, Arjo Klamer and Richard Brook. It is an economics for grown ups.”

The glaring inadequacies of modern economics were highlighted however with the Housing Bubbles induced Global Financial Crisis, as the writer explained within an article Housing Bubbles And Market Sense some two years ago, more recently within Sound Housing Market Measures Required and on a lighter note Australia is different.

It is pleasing however to see these hugely constructive conversations occurring within and outside the economics profession, as this profession has a huge influence on the public’s understanding of “how the world works”, public policy and other professions.

If economists, policymakers and the wider public understood the significance of the “artificial scarcity triggers” being the cause of the housing bubbles, with finance simply being the “fuel” (as Mike Insulmann, CEO of the urban research group MetroStudy does), the perils of strangling urban land supply and inappropriately financing infrastructure, would have been “blindingly obvious” to them decades ago.

The Annual Demographia International Housing Affordability Surveys illustrate clearly year after year that housing should not exceed three times annual household income. Adding “financial fuel” would have simply led to over production of new housing (note Atlanta, Georgia – refer Schedule 2 Demographia Survey) – not housing bubbles – something far less damaging.

Importantly too – business and professional organizations need to act ethically and in the wider public interest, as the writer explained to the Housing Industry of Australia - The need for clarity – some years ago. Business can only prosper in an environment where it is trusted. It’s past time they realized this.

ENDS

© Scoop Media

 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines


Gordon Campbell: On Why Herd Immunity Isn’t A Valid Option, And What’s With Our Reluctance To Wear Masks?

Herd immunity has recently bounced back into the headlines as a tool for managing Covid-19, and as a supposed alternative to lockdowns. In the US, a group of scientists was recently brought together in the town of Great Barrington, Massachusetts by a think tank funded by the Koch brothers. The assembled scientists signed the so called Barrington Declaration, which promotes herd immunity as a rational means of re-opening US public schools and the economy at large... More>>

 

Gordon Campbell: On National Being Shafted By Its Own Creation

As it licks its wounds, let’s hope the National Party can still find time to look back with some pride at what it has achieved in Epsom. The Act Party’s nationwide success on Saturday night has been a tribute to National’s foresight, and to its ... More>>

ALSO:

Green Party: 'Fruitful Discussions ... Further Discussions To Have'

The Green Party says there is a negotiation going on with the Labour Party, but there are more discussions to be had. More>>

ALSO:


Border: No Changes To Border Exemptions After Fishing Crew Test Covid-19 Positive

The cases were detected after routine day three testing but the immigration minister and air commodore agree there's no need to change border exemptions. More>>

PSA: Labour-Led Government Has Mandate For Transformation, Equality And Transparency

The Public Service Association welcomes the progressive electoral landslide New Zealand voters delivered on Saturday, and the union says its members look forward to implementing policies that reduce poverty and inequality, support affordable housing ... More>>

ALSO:


Stats NZ: New Report Shows Significant Changes To New Zealand’s Climate

Climate change is already happening in New Zealand and could have a profound impact on future generations of New Zealanders, a new report from the Ministry for the Environment and Stats NZ says. Our atmosphere and climate 2020 , released today, includes analysis ... More>>

ALSO:

Judith Collins: Obese People Must Take Responsibility For 'personal Choices'

National Party leader Judith Collins has described obesity as a weakness and says people should not 'blame systems for personal choices'. More>>

Māori Party: Poll Reveals Tamihere On Cusp Of Historic Māori Movement Election Victory

John Tamihere’s election campaign is on the rise and on track to return the Māori Party to parliament, a new Māori TV poll has revealed. The poll released on 11 October during the seventh and final Māori TV Maori Electoral campaign coverage has Tamihere ... More>>

Gordon Campbell: On Four-Year Terms Of Parliament, And On How The US Courts Are Dismantling Democracy

Last week, the issue of four-year parliamentary terms surfaced again. Infuriatingly, it is being discussed purely in terms of its convenience for political parties. They’d get so much more time to enact their policies, free of scrutiny or sanction by voters ... More>>

ALSO:

 
 
 
 
 
 

LATEST HEADLINES

  • PARLIAMENT
  • POLITICS
  • REGIONAL
 
 

InfoPages News Channels