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Boring backstory:
I listen to lectures while commuting and traveling. I started with history and have branched out since I finished most of the ones I was interested in. Now I have listened to some courses on economics. So my knowledge is limited on economics and I have come to RSP, the great repository of all knowledge, for help.

Disclaimer:
Because of my limited understanding of economics, my terminology is most likely incorrect. Hopefully any economists here can understand the point I am trying to get across though.

Meat of the discussion:
If we look at the world, there is obviously a lot of economic inequality. Is there a way for world economics to develop so that nobody lives in poverty?

According to google, if all the wealth in the world were evenly divided each person would have $9000. That is not much to live on. Can that be increased so that everyone has $50,000 or more?

I'd like to focus just on the mechanics of increasing global prosperity and ignore the hurdle of distribution right now. For the sake of this discussion let's just assume that the distribution problem has been solved. At that point, how do we increase total global prosperity?

It seems to be commonly accepted that we cannot just print lots of dollars or just add trailing zeroes to bank accounts to increase global wealth because that leads to inflation.

My simplistic understanding of why printing money leads to inflation is because it does not increase the amount of goods available to be purchased with that money. More money with the same amount of goods to buy means people will pay more to buy the goods. Or something like that.

So that leads me to believe that more wealth can be created through more work. If someone mines gold, that person has added wealth to the system, right? If a person creates goods that can be bought then that also adds wealth to the system. As goods are produced more efficiently, even more wealth is created. Is that how it works?

If that is true, is it simply a matter of generating more goods? Can money be printed and paid as wages to employ people in creating wealth? Will that bypass the inflation problem? Or do we end up with the same inflation problem? My guess is that the inflation problem would still be there, but I don't understand the mechanics of it.

What is the path to global prosperity?

edit: fixed link. Thanks perfalbion!
 
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Styro wrote:
Boring backstory:
I listen to [url="www.thegreatcourses.com"]lectures[/url] while commuting and traveling.


Boring BGG thing - if you make your tags look like this (quote to see what I changed), your link will be clickable.

Quote:
If we look at the world, there is obviously a lot of economic inequality. Is there a way for world economics to develop so that nobody lives in poverty?


Quite possibly. But that's sort of "what if we all had personal replicators?" thinking. There's so much wrapped up in this in terms of governments, borders, resources, distribution, and whatnot that it might be easier to envision faster-than-light travel.

Quote:
According to google, if all the wealth in the world were evenly divided each person would have $9000. That is not much to live on. Can that be increased so that everyone has $50,000 or more?


This is based on taking GDP and dividing by population or something? Can you link to the source here?

$9000 doesn't sound like a lot, but if you factor in cost of living, it's a huge amount of money in a good number of countries. Were you to set the standard differently, like "Provide everyone an income that pulls them out of poverty locally," you might find that there's still sufficient money to go around.

The biggest issue you're going to run into is "How do you structure an economy to make this actually happen?" or "What does the government need to look like?" Those are immensely complicated questions.
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The globe cannot live at the same level of consumption the US currently enjoys, full stop.

New tech and resource development may alter the equation, but realisticly we need more stuff or less people in order to affect a global equivilence.

The much more managable question is, can we affect a smaller disparity in quity of life on a more local(national) level?
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Styro wrote:
Boring backstory:
I listen to [url="www.thegreatcourses.com"]lectures[/url] while commuting and traveling. I started with history and have branched out since I finished most of the ones I was interested in. Now I have listened to some courses on economics. So my knowledge is limited on economics and I have come to RSP, the great repository of all knowledge, for help.

Disclaimer:
Because of my limited understanding of economics, my terminology is most likely incorrect. Hopefully any economists here can understand the point I am trying to get across though.

Meat of the discussion:
If we look at the world, there is obviously a lot of economic inequality. Is there a way for world economics to develop so that nobody lives in poverty?

According to google, if all the wealth in the world were evenly divided each person would have $9000. That is not much to live on. Can that be increased so that everyone has $50,000 or more?

I'd like to focus just on the mechanics of increasing global prosperity and ignore the hurdle of distribution right now. For the sake of this discussion let's just assume that the distribution problem has been solved. At that point, how do we increase total global prosperity?

It seems to be commonly accepted that we cannot just print lots of dollars or just add trailing zeroes to bank accounts to increase global wealth because that leads to inflation.

My simplistic understanding of why printing money leads to inflation is because it does not increase the amount of goods available to be purchased with that money. More money with the same amount of goods to buy means people will pay more to buy the goods. Or something like that.

So that leads me to believe that more wealth can be created through more work. If someone mines gold, that person has added wealth to the system, right? If a person creates goods that can be bought then that also adds wealth to the system. As goods are produced more efficiently, even more wealth is created. Is that how it works?

If that is true, is it simply a matter of generating more goods? Can money be printed and paid as wages to employ people in creating wealth? Will that bypass the inflation problem? Or do we end up with the same inflation problem? My guess is that the inflation problem would still be there, but I don't understand the mechanics of it.

What is the path to global prosperity?


First a disclaimer. I think it's fundamentally impossible for prosperity to exist without poverty. It's a relative term that needs a counterpoint. If everybody is the same, then it has no meaning to people who don't know anyone or can't remember what it's like to not be prosperous. See also happiness, tallness, fatness, smartness, hotness, etc. Any word that can be defined as the opposite of something else.

That said, I'm not saying that the condition of everyone having the same and that sameness being better than that most people are used to now. I just don't think the same language applies. It's a semantics thing.

Creating more money won't accomplish this, as you've already suggested. It would just cause inflation.

What will get us there, and we're actually right on a very scary threshold, is AI and automation. I've said it before and I'll say it again. As a society, we're going to have to make a choice between Utopia and Dystopia (Star Trek vs. Logan's Run).
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First, I'd not look at wealth from any single currency: What a dollar buys in one place can be very different than what it buys in another, especially when it's buying people's time.

But yes, ultimately wealth is productivity, and therefore the world as a whole becomes wealthier when everyone can accomplish more, which puts together education and technology. It's not as if farmers in Africa are lazy, but the large majority get 1/10 of the yields that a big farm in Idaho gets per acre. Letting humanity do less with more. A huge part of the amazing wealth increases in the last 200 years come from how we've managed to make food and electricity so cheap. For most of humanity's history, light was a luxury and a lot of time was spent on just getting food. Today getting light at night rounds close to zero and we barely dedicate resources to farming, yet food is plentiful in places with economic development. Hunger is not a matter of production, but distribution.

So when people look at wealth and say that the world can't handle everyone consuming resources as an American, they are not really looking at wealth either: If I a society can get things more efficiently, that society is wealthier too!

The trick is that, while it's easy to help people produce more, it's not so easy to make people produce things we want. If everyone was an expert fruitcake maker, would we all be able to be employed making and selling fruitcakes? We have to make things other people want, or it's not really wealth. That's the main source of poverty in the world: People with no marketable skills, or that can't move to places where their skills are wanted. One is down to more education, the other to more open borders.
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Styro wrote:
I'd like to focus just on the mechanics of increasing global prosperity and ignore the hurdle of distribution right now. For the sake of this discussion let's just assume that the distribution problem has been solved. At that point, how do we increase total global prosperity?
I don't know how to decouple the two. As others have said, the "average" Chinese or Indian can't have the standard-of-living of your "average" American. But some form of wealth distribution would be necessary to affect a narrowing of income inequality. The quibble becomes: How much do you narrow until inequality is deemed sufficient?

Don't make me bust out the Rush song about trees that join labor unions!!!

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fightcitymayor wrote:
Styro wrote:
I'd like to focus just on the mechanics of increasing global prosperity and ignore the hurdle of distribution right now. For the sake of this discussion let's just assume that the distribution problem has been solved. At that point, how do we increase total global prosperity?
I don't know how to decouple the two. As others have said, the "average" Chinese or Indian can't have the standard-of-living of your "average" American. But some form of wealth distribution would be necessary to affect a narrowing of income inequality. The quibble becomes: How much do you narrow until inequality is deemed sufficient?

Don't make me bust out the Rush song about trees that join labor unions!!!



I will thumb any Rush video regardless of content. Just for the record.
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There are a lot of good points that have been brought up so far. Let me address some of them. I will use multiple posts so I do not end up with a monolithic wall of text and to make quoting easier.

perfalbion wrote:
Styro wrote:
If we look at the world, there is obviously a lot of economic inequality. Is there a way for world economics to develop so that nobody lives in poverty?


Quite possibly. But that's sort of "what if we all had personal replicators?" thinking. There's so much wrapped up in this in terms of governments, borders, resources, distribution, and whatnot that it might be easier to envision faster-than-light travel.

Very true. I'm basically talking rainbows and unicorns here. I guess my approach is asking, "What does utopia look like?" And then trying to figure out how to get there. I believe that distribution, corruption, and greed are ENORMOUS obstacles to achieving what I am talking about, but the thought occurred to me that even if those obstacles did not exist, if distributing the world's wealth only served to bring everyone into poverty then it did not accomplish my goal. So I tried to focus on one aspect of this overall problem: how can we increase total global wealth?

Quote:
Quote:
According to google, if all the wealth in the world were evenly divided each person would have $9000. That is not much to live on. Can that be increased so that everyone has $50,000 or more?


This is based on taking GDP and dividing by population or something? Can you link to the source here?

I just picked one of the first results that popped up when googling "if all the money in the world was divided evenly". Looking at more results it seems like there is a fairly wide range of estimates, some as high as $30k which doesn't sound nearly as bad.

Quote:
$9000 doesn't sound like a lot, but if you factor in cost of living, it's a huge amount of money in a good number of countries. Were you to set the standard differently, like "Provide everyone an income that pulls them out of poverty locally," you might find that there's still sufficient money to go around.

Also very true. $9000 a year in Cambodia is a lot different from $9000 a year in the US. What I was imagining was having everyone at essentially "first-world" level, so perhaps a western European or US standard. This raises issues that I had not thought of but that were mentioned by others.
 
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Define what you mean by prosperity.

If you mean...
Can everyone (who wants one) have clean, dry living quarters, three healthy meals a day with a reasonable amount of protein (3-4oz), clean water, with healthcare for acute issues and many chronic issues, and more entertainment than they can consume in a lifetime.

The answer is yes.

If you mean, can everyone live like an american making $200,000 a year and up... most of the answer currently is no and part of the answer is permanently no.

Wealthy americans consume insane, completely unsustainable amounts of resources.

Also, if anything in the world is limited and rare, not everyone can share it. Not everyone can have a beach house in the Hamptons. Not everyone can sit on the 3rd row center for the latest hot rock star concert.

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Shadrach wrote:
The globe cannot live at the same level of consumption the US currently enjoys, full stop.

New tech and resource development may alter the equation, but realistically we need more stuff or less people in order to affect a global equivalence.

The much more managable question is, can we affect a smaller disparity in quality of life on a more local(national) level?

Honestly, this had not occurred to me when thinking about the problem, but it seems obvious once you bring it up.

We will certainly need to reign in consumerism. I do not believe that there are not enough resources in the world for the entire population to consume as much as the average American.

This brings up other questions I will address in a post responding to ejmowrer regarding automation.

Regarding affecting local poverty I think that is much more manageable. I was thinking that if we can increase the total wealth in the system, and if we assume that the distribution et al problems are resolved that the local poverty issue would be resolved.

But maybe the better approach is to try to resolve local poverty, and by doing that the overall global poverty problem will be resolved. But there are so many countries with overwhelming poverty that I'm not sure their local problems can be resolved without a great deal of outside help.
 
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Styro wrote:
I just picked one of the first results that popped up when googling "if all the money in the world was divided evenly". Looking at more results it seems like there is a fairly wide range of estimates, some as high as $30k which doesn't sound nearly as bad.


Yeah, this math is really sorta silly. GDP is economic activity, not wealth. And it includes a whole lot of money you couldn't easily divide up without, ya know, not building cars.

Moreover, the math here needs to take into account geography. $9k annually is horrid in the US but really, really good in a huge portion of the world. You can break the poverty line in a lot of the world on less than $10/day.

It's fun to think about, but realistically you need to start with "how do we create a single world government" first.
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ejmowrer wrote:
First a disclaimer. I think it's fundamentally impossible for prosperity to exist without poverty. It's a relative term that needs a counterpoint. If everybody is the same, then it has no meaning to people who don't know anyone or can't remember what it's like to not be prosperous. See also happiness, tallness, fatness, smartness, hotness, etc. Any word that can be defined as the opposite of something else.

That said, I'm not saying that the condition of everyone having the same and that sameness being better than that most people are used to now. I just don't think the same language applies. It's a semantics thing.

Creating more money won't accomplish this, as you've already suggested. It would just cause inflation.

What will get us there, and we're actually right on a very scary threshold, is AI and automation. I've said it before and I'll say it again. As a society, we're going to have to make a choice between Utopia and Dystopia (Star Trek vs. Logan's Run).

Good points. I have forgotten my first lectures on economics where I was told that prosperity is completely relative.

I am curious about what long-term affect automation will have. If we compare it to the industrial revolution I think we can draw some parallels. The downside will be that the automation owners will get wealthy and the rest of the people will become poorer.

On the other hand there will be more goods produced which theoretically means more overall wealth. If (big IF, I know) the wealth distribution problems are resolved then it should be a net positive.

Will we get to the point where almost everything can be mass-produced for low cost? Of course, the cynic in me says we can already mass-produce food for relatively low cost yet there is still an immense number of undernourished people in the world.
 
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hibikir wrote:
But yes, ultimately wealth is productivity, and therefore the world as a whole becomes wealthier when everyone can accomplish more, which puts together education and technology. It's not as if farmers in Africa are lazy, but the large majority get 1/10 of the yields that a big farm in Idaho gets per acre. Letting humanity do less with more. A huge part of the amazing wealth increases in the last 200 years come from how we've managed to make food and electricity so cheap.

...

The trick is that, while it's easy to help people produce more, it's not so easy to make people produce things we want. If everyone was an expert fruitcake maker, would we all be able to be employed making and selling fruitcakes? We have to make things other people want, or it's not really wealth. That's the main source of poverty in the world: People with no marketable skills, or that can't move to places where their skills are wanted. One is down to more education, the other to more open borders.

I visited Cambodia a few years ago and that trip is one of the things that got me thinking about global poverty. Let's say I have a large amount of money (like $1B) that I wanted to throw at a problem like Cambodia. How could I help?

Cambodia is somewhat unique because of the massacre of their educated citizens. A large part of their citizens essentially went back to subsistence farming.

If I built an enormous rice farming conglomerate that was able to produce rice very cheaply (or even free) that would help with the starvation factor. The people would not need to spend their time farming and could instead spend time working other jobs.

But they would need education. I could also build free schools to train the people so that they would have a marketable skill.

Would those two things (free/cheap food and education) be enough to bring Cambodia up out of its current problems in a generation? Would additional problems be introduced by that solution?
 
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Eric "Shippy McShipperson" Mowrer
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Styro wrote:
ejmowrer wrote:
First a disclaimer. I think it's fundamentally impossible for prosperity to exist without poverty. It's a relative term that needs a counterpoint. If everybody is the same, then it has no meaning to people who don't know anyone or can't remember what it's like to not be prosperous. See also happiness, tallness, fatness, smartness, hotness, etc. Any word that can be defined as the opposite of something else.

That said, I'm not saying that the condition of everyone having the same and that sameness being better than that most people are used to now. I just don't think the same language applies. It's a semantics thing.

Creating more money won't accomplish this, as you've already suggested. It would just cause inflation.

What will get us there, and we're actually right on a very scary threshold, is AI and automation. I've said it before and I'll say it again. As a society, we're going to have to make a choice between Utopia and Dystopia (Star Trek vs. Logan's Run).

Good points. I have forgotten my first lectures on economics where I was told that prosperity is completely relative.

I am curious about what long-term affect automation will have. If we compare it to the industrial revolution I think we can draw some parallels. The downside will be that the automation owners will get wealthy and the rest of the people will become poorer.

On the other hand there will be more goods produced which theoretically means more overall wealth. If (big IF, I know) the wealth distribution problems are resolved then it should be a net positive.

Will we get to the point where almost everything can be mass-produced for low cost? Of course, the cynic in me says we can already mass-produce food for relatively low cost yet there is still an immense number of undernourished people in the world.


It's going to be much more of an impact than the industrial revolution was, and the industrial revolution had a huge impact. It made large cities and suburbs possible. It allowed people to specialize into thousands of different careers.

We're at a point where the concept of free energy, free water, and free food and shelter and basic amenities are within reach. The problem is that even if these things cost next to nothing, you still won't be able to afford them with no income.

One thing is for sure, the people who currently have power will not give it up willingly, save a tiny fraction of rich people who are altruists. If those things do become free, there will be some other catch.

If we do figure it out and manage to break through to the next plateau, I think people will be able to freely choose their careers based on passion and inclination rather than have to do it based on stable income and job security. The arts will explode with a new golden age and technology and science will surge ahead again.

With any luck we'll figure out space exploration and colonization before we completely kill ourselves or the planet off.
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maxo-texas wrote:
Define what you mean by prosperity.

If you mean...
Can everyone (who wants one) have clean, dry living quarters, three healthy meals a day with a reasonable amount of protein (3-4oz), clean water, with healthcare for acute issues and many chronic issues, and more entertainment than they can consume in a lifetime.

The answer is yes.

I think this is a very good definition for overall what the low end of my goal would be. If possible I would like us all to be living Star Trek lives where we have replicators for everything or where goods and food are abundant.

But just getting everyone to a basic survival level where they have reasonable access to clean water, food, shelter, and education is a more realistic and reasonable goal.
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What you want are goods, distributed to your target population to some standard of evenness--complete equality is impossible, not only because it doesn't work but also because people place different values on things.

Money is not a good, it's a way of moving value independent of goods. (Moving the goods is barter, and you may know how complex math trades are.)

Work is not a good, and it may destroy goods. Robert Heinlein's example was an incompetent cook taking apples, valuable and nutritious already, and burning the apple pie, destroying the apples. Likewise, a bad vintner can take valuable grapes and make them worthless.

I think the usual term for what makes more goods is productivity.
Wikipedia

Take grapes. A (hunter)-gatherer grabs some grapes from a random vine and eats them, then walks around a long time looking for another grape vine, or a chicken to strangle.

With the advent of agriculture (viticulture), the grape vines are collected together so the grower can walk from one to another easily, and can further increase productivity by weeding, trimming, etc. The Agricultural Revolution.

In the Industrial Revolution, tractors became available, complex watering systems, etc. More productivity.

In the Automation Revolution, automatic picking machines, vertical farming (where plants are grown in layers by LED light), and eventual total automation will add still more productivity--but it also decisively uncouples human work from production of goods.

The basic Physics limit is the amount of sunlight striking the earth. We can imagine ships or barges covered in solar cells powering vertical farms, all automated.

Trade is required. Just limiting to food and clothing, if I have to grow my own grapes and cotton, my farm is going to be inefficiently small and low productivity. Even if I can grow grapes and cotton more productively than another area, it makes sense for me to entirely grow the more valuable, buy the other, and pocket the difference. Trade isn't a zero sum game, as many people seem to think.

When you add in regional factors, like where grapes grow best vs. where they don't grow at all, trade is even more important.

So, that's my summary of the basic Economics involved. Obviously, other issues arise: "guns or butter" (defense or food), politics, greed, etc. But I think the progress China and India have made is pretty positive, and Africa is showing some interesting progress in some areas:
https://www.cnbc.com/2013/11/11/cashless-africa-kenyas-smash...

You might find Crash Course Economics interesting; it's much lighter and faster than a traditional Economics book:
https://www.youtube.com/watch?v=3ez10ADR_gM&list=PL8dPuuaLjX...
The speed is good for getting your head around all the basics.
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Styro wrote:
maxo-texas wrote:
Define what you mean by prosperity.

If you mean...
Can everyone (who wants one) have clean, dry living quarters, three healthy meals a day with a reasonable amount of protein (3-4oz), clean water, with healthcare for acute issues and many chronic issues, and more entertainment than they can consume in a lifetime.

The answer is yes.

I think this is a very good definition for overall what the low end of my goal would be. If possible I would like us all to be living Star Trek lives where we have replicators for everything or where goods and food are abundant.

But just getting everyone to a basic survival level where they have reasonable access to clean water, food, shelter, and education is a more realistic and reasonable goal.


One ultimate limit is a balance of population, energy/heat per human, earth's ability go radiate heat.

I'm not talking global warming.

Energy per human has been rising annually by some piddling rate since the 1600s. If it keeps rising the same rate, the earth's surface will be above the boiling point of water in under 500 years.

I say this to point out, even free energy too cheap to meter, independent of agw, has limits.

On a related note, we could roughly double everyone's standard of living if we halve the population.

The recent decline of Japanese population is a good thing for example.
 
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The most important cause of societal poverty is bad governance.

Consider the amount of wealth generated when Deng moved China from Maoism to (albeit incomplete) capitalism.
Alternatively, consider what happened to Zimbabwe's economy under Mugabe or Argentina's under Peron (and his heirs).

There is no reason why the world at large can not have reasonable standards of living (although global GDP of 50k per head is a little much considering that not even the USA is there at the moment). All that needs to happen is for the majority of societies to have governments that

a) are not actively trying to steal from their citizens (and I mean in the literal sense - not stupid libertarian 'taxes are theft' sense)

b) are not committed to the idiotic proven-to-be-false economic ideas
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Styro wrote:
What is the path to global prosperity?

That is a really good question! Like you, I'm convinced we can achieve it. Not only that, but I really think that we're on the path to achieving it, although it's case of 'two steps forward, one step back'. Two current trends which militate against global prosperity are the persistent (and in some countries increasing) levels of corruption in so-called democratic systems of governance, and the increasing disparity of wealth in the world.

The solution to the first problem is on the level of principle and consciousness. Any elected official, on any governmental body, should regard himself or herself as being responsible for all of mankind, not just to his nominal constituency, far less to those who actually put him in power.

One thing I've observed, having lived in North America, Europe, Africa and the Middle East, is that most people -- by far the majority of people -- want to work and are willing to work hard. What most people are not good at is what we might call 'working smart' -- and this seems to run through all cultures and all professions. Medical doctors, for instance, are good at working hard. They aren't good at 'working smart' in the sense that if their salaries are low, or if jobs just aren't available for them, they have no more ability to find innovative ways to become prosperous than do people who don't have nearly that same level of education. And from what I can see, that's just a human condition: most people have limited capacity to become prosperous if the jobs or the opportunities are not made available to them.

I see, therefore, two solutions to this potential problem: the first in the area of education, and the second in the area of governance. Regarding governance, it's the job of government to ensure that the entrepreneurial capacity which is generally resident in only a fraction of the population, is given free rein to develop, and that the general population is educated or trained to the degree that wealth can be readily created. Historically the United States has been pretty good at this -- if you're in a non-discriminated population group.

Secondly, it's the job of government to ensure that the general population is not abused and exploited by those who have reached positions of power.

There's a statement prepared in 1995 by the Baha'i International Community Office of Public Information, called The Prosperity of Humankind:

http://www.bahai.org/library/other-literature/official-state...

It's really, really good, but it's a bit dense, in places, and may require more than one reading for some of its points to sink in.
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Robert Stuart
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bramadan wrote:
The most important cause of societal poverty is bad governance.

Consider the amount of wealth generated when Deng moved China from Maoism to (albeit incomplete) capitalism.
Alternatively, consider what happened to Zimbabwe's economy under Mugabe or Argentina's under Peron (and his heirs).

There is no reason why the world at large can not have reasonable standards of living (although global GDP of 50k per head is a little much considering that not even the USA is there at the moment). All that needs to happen is for the majority of societies to have governments that

a) are not actively trying to steal from their citizens (and I mean in the literal sense - not stupid libertarian 'taxes are theft' sense)

b) are not committed to the idiotic proven-to-be-false economic ideas

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Trent Boardgamer
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Styro wrote:
Boring backstory:
I listen to lectures while commuting and traveling. I started with history and have branched out since I finished most of the ones I was interested in. Now I have listened to some courses on economics. So my knowledge is limited on economics and I have come to RSP, the great repository of all knowledge, for help.

Disclaimer:
Because of my limited understanding of economics, my terminology is most likely incorrect. Hopefully any economists here can understand the point I am trying to get across though.

Meat of the discussion:
If we look at the world, there is obviously a lot of economic inequality. Is there a way for world economics to develop so that nobody lives in poverty?

According to google, if all the wealth in the world were evenly divided each person would have $9000. That is not much to live on. Can that be increased so that everyone has $50,000 or more?

I'd like to focus just on the mechanics of increasing global prosperity and ignore the hurdle of distribution right now. For the sake of this discussion let's just assume that the distribution problem has been solved. At that point, how do we increase total global prosperity?

It seems to be commonly accepted that we cannot just print lots of dollars or just add trailing zeroes to bank accounts to increase global wealth because that leads to inflation.

My simplistic understanding of why printing money leads to inflation is because it does not increase the amount of goods available to be purchased with that money. More money with the same amount of goods to buy means people will pay more to buy the goods. Or something like that.

So that leads me to believe that more wealth can be created through more work. If someone mines gold, that person has added wealth to the system, right? If a person creates goods that can be bought then that also adds wealth to the system. As goods are produced more efficiently, even more wealth is created. Is that how it works?

If that is true, is it simply a matter of generating more goods? Can money be printed and paid as wages to employ people in creating wealth? Will that bypass the inflation problem? Or do we end up with the same inflation problem? My guess is that the inflation problem would still be there, but I don't understand the mechanics of it.

What is the path to global prosperity?

edit: fixed link. Thanks perfalbion!


Hi Aaron, I'll try to keep the explanation as simple as possible.

Understanding it divides down to $9000 per person is really the point. So if you agree that that would equal prosperity, than I guess in theory yes.

In reality though, it wouldn't aid in equal distribution as living one place more than another will still be more desirable than another, not all occupations require the same effort to perform, etc. Communism in is rawest sense argues about a more equal distribution (But still not totally equal) of said wealth and even that can't create equal distribution.

Using the term prosperity also creates it's own problem as it implies people are some how better off than they were in previous times and whilst a larger number of people could be prosperous with redistribution, the ones you are taking that wealth from will certainly never be as prosperous again.

You also need to consider that many things take unproportioned wealth to create. That new hydro power plant could cost more than the direct percentage of people that cost justifies building under an equal distribution model, so wouldn't never be built. Distribution of food cost more to get to some places than others etc, but to be equally prosperous you would have to discount the distribution (logistical) cost.

There is a lot of talk that technology will eventually remove many of these issues, but in reality it won't ever fix the distribution issue.
In reality you can only be prosperous because you are granted more than your standard share of the worlds wealth divided by current population.

The fact that population continues to increase at such a large rate is also a difficult one. Sadly this is a hard factor to measure as most governments use population growth in GDP (Gross domestic product) figures to prop them up. Why this is problematic, is because due to aging populations a lot of western governments are encouraging net positive immigration to offset other future budgeting issues (like funding age care and medical cost, with a declining revenue taxation base), but you can't actually work out whether an individual in a country is becoming better off or worst off wealth wise (Ignoring the social issues), due to how they construct GDP (It's purposefully manipulated because GDP is often used for a governments report card).

Simply producing more goods doesn't automatically offset the inflation issue of printing more money, as the cost of production increases and your gold mining example for instance, the extra production often increases the base cost of production to get to the harder to reach gold to increase production, meaning it's only profitable to do if the price of gold increases (inflation).

Likewise, you can't just say produce 10% more produce from your farm tomorrow or take 10% more fish from the ocean.

So yes producing more produce in a country leads to greater wealth for that country, but individually my wealth (prosperity) only increases if I get some of that increased productions wealth. So if we froze population growth and increased production and proportionality distributed that, you would increase prosperity, but you'd still have inflation as more people then have money to compete for the goods that aren't in ample supply such as that waterfront mansion, or prime rib steak.

Path to global prosperity? There isn't currently an agreed one (And none that work from my perspective), but I don't see the wealthy looking to give up their share anytime soon. This question is now less about economics and more about politics.
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Mac Mcleod
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If everyone had 9000, a lot of assets would collapse in price until wealth concentrated again.
 
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Yes, everyone can be prosperous, but no, the question of distribution cannot be left aside. Forcible redistribution of wealth undermines and stultifies the wealth-generating process that can lead to universal prosperity. Though I would contend that Economics did not begin with Adam Smith, he most famously laid out the pathway toward prosperity in his "The Wealth of Nations." Nations have prospered insofar as they have followed free-market capitalism and faltered as they departed from it.

How can everyone be prosperous in the face of the ineluctable fact of scarcity? The answer to this question is productivity improvement. Productivity improvement comes by way of increase in the stock of capital goods and by technological improvement. These processes in turn are most effectively fostered by private investment and freely-competitive entrepreneurship.

If you look at U.N. statistics, the proportion of people in abject poverty has been declining and hundreds of millions of people have been escaping from poverty, so the trend is already in the right direction.

The "rising tide" of prosperity takes the form of deflationary economic growth. This free market trend of appreciation of the monetary unit can be disguised by bank credit expansion and government money printing in a hindered free market. The largest sources of such growth recently have been economic globalization, abandonment of Communism, automation and information technology.

The pathological increase in inequality and hollowing out of the middle-class is policy driven. The largest culprits are central banks, their co-operating cronyist Wall-Street investment banks and the diversion of social surplus to the military-industrial complex through a deliberate policy of endless war.
 
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