Re: Re: Keeping focus after the WTO

[michael perelman <michael@xxxxxxxxxxxxxxxxx>]

Brad, if free-trade is the key to convergence among economies, why has
the South taken so long to catch up with the northern United States, even
with the concentrated political power of the South that gave them so much
military spending?

What country, as Paul asked before, has developed following the rules of
laissez-faire?  The closest example may have been Sweden, which Barkley
suggested, but Sweden was atypical.  It had a better chance of converging
because it had relatively good labor standards, good education, and
fairly good natural resource base. But then, I don't know much about
Sweden.

The literature about convergence is very spotty.  In some places, some
previously poor countries have made a great deal of progress, often as
entrepots and never are following the rules of laissez-faire.

By the way, this discussion about convergence dates back to the time of
David Hume and Josiah Tucker.

Finally, although I rebuked Lou for the way he criticized you, he had a
strong point of the destructive form that peripheral development takes.

Brad De Long wrote:

> One of the principal facts of world economic history over the past
> century has been *divergence*--that technology is invented in the
> industrial core and by and large *stays* *there* rather than being
> adapted to conditions elsewhere and implemented. Hence workers and
> bosses in the industrial core today are richer than their
> counterparts in 1850 by a factor of 10? 20? 30? or so, it depends how
> you count.
>
> By contrast, workers and bosses out on the periphery are only richer
> in a material sense than their counterparts in 1850 by a factor of 5?
> 2? and in a bunch of cases not at all. (Of course, improvements in
> public health that standard economic statistics do not measure very
> well have had a powerful impact on human happiness: material standard
> of living is not the be-all and end-all for this and for other
> reasons.)
>
> One view--a view that has evidence supporting it, but that I am not
> sure is correct--is that our best chance for large-scale technology
> transfer is free trade: more economic contact between center and
> periphery means more technology transfer to the periphery. And the
> bosses won't be able to appropriate *all* of the gains.
>
>  From this perspective, those who are opposed to free trade--whether
> because they view high labor productivity in Hermosillo as a threat
> rather than an opportunity, because they think the U.S. should use
> its market power to shape environmental policy in India (rather than,
> say, negotiating with India for the terms on which shrimp fishers
> will use TED's, because they want Agra to stay picturesque, or other
> reasons--are the Enemies of Utopia.
>
> I actually thought that Barkley was somewhat restrained...
>
> :-)
>
> Brad DeLong

--
Michael Perelman
Economics Department
California State University
Chico, CA 95929

Tel. 530-898-5321
E-Mail michael@xxxxxxxxxxxxxxxxx