Monday, December 10, 2012

False Economy : Lessons from the past...

Last weekend I went to the Robinson Sale at Expo. While shopping I picked up this book:
The first week pages were interesting enough for me to consider buying the book. But to be sure was good and credible, I used my smartphone to check the background of the author. The author, Alan Beattie, is the International Economy Editor of Financial Times. His book has received good reviews:

  "A thorough examination of economies from the age of empire to the age of the IMF. . . Beattie writes, ‘History is not determined by fate. . . It is determined by people.’ He insists that it is not destiny but the right and wrong decisions by political leaders that cause societies to rise and fall. Beattie's analysis dazzles. . ." — Washington Post Book World

His first chapter explored and compared how 2 countries, Argentina and USA, both with almost the same level of economic development in 1900 ended up with diametrically different outcomes.- one became an economic super-power while the other ended up in bankruptcy in 2006[Link].  Argentina in 1800 and 1900 was one of the wealthiest nation in the world[Link]. In 1900, Boenos Aires was on par with New York. How did the 2 countries end up with such different fates?

Beattie explained that while the both countries had similar starts in terms development and natural resources, the systems they had in place were different. Argentina was controlled and ruled by a small number of elites modelling themselves after autocratic Spanish rule while USA was a full fledged democracy. Land ownership in Argentina was concentrated in the hands of wealthy land owners while in the USA, there were in the hands of smaller farmers  i.e. more equally distributed. Because the farmers in US owned smaller plots, they had to be more productive to achieve better yields from their land employing farming techniques from Dutch farmers. In Argentina, the powerful land owners imported cheap labor from poorer parts of Europe to work on their farms - the imported labor would work on the farms for certain parts of the year and return home. The availability of cheap labor meant that they were able to achieve high profits when productivity was low. The availability of cheap labor was a disincentive for the rich to take risk and invest in new industries (industrialization). The model resulted in extremely unequal wealth distribution and the wealthy class started to wield enormous influence over political leadership eventually leading to social upheavals, instability and corruption.

Argentina was a wealthy first world country that fell back to become a third world country due to missteps. This a cautionary tale for leaders today that the future of a country is destiny not fate - where your destiny lies is a result of choices you make today.



Here is Alan Beattie discussing his interesting book:




26 comments:

Anonymous said...

"Argentina was controlled and ruled by a small number of elites modelling themselves after autocratic Spanish rule while USA was a full fledged democracy."

This statement has a familiar ring to it.

Anonymous said...

"Argentina was controlled and ruled by a small number of elites modelling themselves after autocratic Spanish rule while USA was a full fledged democracy."
Lucky Tan

Singapore is also a full fledged democracy what.

But 60% voted the PAP and not the opposition to be govt what.

So if PAP wield enormous influence over political leadership and cause great inequality, blame the 60% and democracy lah, tio bo?


Veritas said...

Roman has the same problem way back. It was the captive slaves and confiscated enemies' land after the punic war the make Roman elites rich.

The citizen farmers went bankrupt due to the inablility to compete with slave labor plantations. Also when the abled bodied man went to serve in the army fighting for the countries, the woman, old and children left behind are not able to be productive. Upon bad harvest, the farms are sold to rich. That bamkrupt numerous honest citizens.

In fact cheap labor is often the reasons where empire fall and elites got slaughtered. China has 3000 years history of landlordism. Often, corrupt elite evict the citizens from their land. These landless peasant then enslave themselves as serf to the landlord.

Hence China has 300 years frequency of peasant revolution, ending in the massacre of all landlord. The last one occur in 1950 when Mao took power.

The worst is India. Dalits are kick off their land and up to the extend of forbidden to own land. They are allocate hereditary jobs as shit collector or prostitute for their woman. Indian who acheive the highest civilization during the era of Mohanjo Daro and Harrapa is today the most miserable country in the world.

In SG, LKY create inequality by taking up all the poor man land and well as land of his potential rivals. Then PAP sell us 99 years lease hold prison taking away 1/3 of our labour output in our productive years, not unlike what the Brahmins or Chinese landlord did.

If the Malay still have their Kampong, they will be millionairs by now. In fact, many Malay ex-kampong kids end up as convict and criminals as they adapt to HDB life. Who is the culprit? Its LKY.

Anonymous said...

Darkness once explained to me, it was the military junta that killed Argentina. He said, the number of soldiers in govt is actually proportional to the loss in opportunity cost and depreciation of intellectual capital. And he even noted this trend for all military ruled regimes. Or countries where there is a disproportional reliance on the armed services to run the govt like Thailand, Chile, KMT Taiwan, Iraq, Iran under the Shah etc. He was even modeled it mathematically. May you can ask him to share his theory.

Veritas said...

In fact shortage of labor is what that drives technological advancement. The backdrop of Europe Renaissance is black death who decimate 1/3 of European, making the elite to innovate.

The prosperity of USA is due to protection of labor. A lot of automation occur in USA because labor is expensive. If labor is cheap, no one would invest in automation.

Kuan-Yew-ism is simply the code word for slavery. USA used to have a corrupt banking elites but after 1929 Great Depression, FDR manage to impose socialism that pave way for USA's greatness.

In 1950s, the higest tax bracket is closer to 90% making USA an effective socialist country.

Singapore prosper not because LKY is smart. Its because LKY offer cheap labor for USA elite to exploit on first stage.

On the current stage, LKY offer banking secrecy for corrupt rich to hoard monies. In short, we enrich ourselves by destroying others. We are a parasitic state.

I am a socialist.

Anonymous said...

Cannot blame the elites in the societies lah.
It was and is that the small farmers dont want to farmers lah. They rather be call girls and pros in towns and the men rather be peons, drivers and waiting staff to flirt with the girls in the cities.
Serve them right when they becone serfs.
Anyway, when Singapore has great men like Mr Lee Kuab Yew and Mr Lee Hsien Loong to manage the people and the state, nothing will go amiss.

Is there any better calibre than them and the people they selected to make and keep Sin a shining little state that was a little fishing village before the father and son?

Anonymous said...

Very true.

Look at the World at large, most inhabitants in villages are the elderlies and the youngs. The rest have gone to towns.

In the past, US Farmers were able to run their huge farms effectively and productively. l
Those in Europe, Australia, New Zealand who actually model their farmings after the Americans, are doing very well.

Farmers elsewhere are not as organized and are still very much labour intensive.

The well to do farms are highly mechanized with highly efficient machineries and good management.

Anonymous said...

Historian Niall Ferguson cane up with the 6 killer apps of the West. One of them is Property, which also lies along the same line as what you have just outlined.

http://www.amazon.com/Civilization-West-Rest-Niall-Ferguson/dp/0143122061/ref=sr_1_1?s=books&ie=UTF8&qid=1355123397&sr=1-1&keywords=niall+ferguson+civilization

Anonymous said...

I think msia are doing better than spore in terms of living . They have since catch up a lot for the last ten years. Any manager in msia will own a nice freehold house, a proper car, a family, a good job. Comparing to a manager in Spore will only have a 99leasehold state owned flat, no car, no family (too expensive to start one), a job that will be replaced by foreigners anytime. Moreover, msia now has minimum wages and more freedom of rights and also pay better return on the provident funds. It may not be perfect but it is making good progress unlike spore that is moving backwards to middle ages as the one party feels more fear to lose power.

Anonymous said...

anon1439 - 'Is there any better calibre than them ' - is it ruthlessness or calibre? i do not think that they have any special talents or calibre except ruthlessness. scrap the isa and free the media to prove me wrong.

Anonymous said...

anon1439- 'when Singapore has great ...... to manage the people and the state, nothing will go amiss.' - really nothing will go wrong? are you ill informed or never come out of your shell? are people being managed or oppressed? i think they are just two big asses that overstayed their time. everything has an expiry term.

Veritas said...

Many Singaporeans are mentally masturbated by LKY thinking Singapore has good standards of living. We have a high salary. Thats all. They indirect tax by PAP has put our standard of living maybe somewhere around Mexico.

Talking about standards of living,we must look beyond salary. We must look things like car ownership, landed property ownership, number of holidays, debt burden, area of park and green space per unit resident, doctors per unit capita.

We failed all that miserably.

Take example,

Car ownership per 1000 ppl for
*Singapore - 110
*Mexico - 142
*Czech Rep -358


http://www.singstat.gov.sg/stats/keyind.html


http://www.google.com/imgres?imgurl=http://media.economist.com/images/rankings/11-CarOwnership01.jpg&imgrefurl=http://www.skyscrapercity.com/showthread.php?t%3D717914%26page%3D3&h=600&w=550&sz=58&tbnid=yvHrSk0hxMKpWM:&tbnh=90&tbnw=83&zoom=1&usg=__j6dL7OTzClQYYg1iNtmsuUcXtUs=&docid=SQa3vZqS2kS_bM&sa=X&ei=3pnFUIvaIsT_rAf80IHYAQ&ved=0CHwQ9QEwCA&dur=15



Wait a minute, but we have a higher income and why cant we afford that goodies? The reason is PAP do not want us to. PAP want us to suffer. We could have a higher car ownership. But then PAP imported FT and told us we do not have space. Everyone could have a landed property. Again PAP import FT to screw us.

You can be assured, PAP is going to screw us for every good things in life. Population ponzi and financial engineering are tricks that PAP make us pay to death and maintain a mirage that we are rich.

We could have more parks...etc

Wake up, my fellow citizen.

Anonymous said...

Sin has many people holding titles of consultant, adviser, executive, manager, president, director and what not. But, they are all like 'pencak', a form of flowery art only for show. There is no suvstance to those titles(appointments)

patriot said...

Anon was right in saying the Lees of father and son are the best.
60+% of Singaporeans agree to that statement.

Even if they are lousy, there were none better to take over them, so they are still the best.

patriot said...

For 5 Decades, Singaporeans have not found no better calibre to replace the Pair.

patriot

Anonymous said...

When you have a small elitist group or a charismatic individual running a country, it is bound to fail owing to the imperfection of the human race. The individual soon becomes a despot, the elitist group soon obtains power through oppression of the masses. These people start to think that they are unstoppable and their right to rule divine. Just like the PAP.

Democracy works because, though the process is slow and time consuming, is mean as a form of check and balance against the failings of an individual or a small group of elite.

Anonymous said...

Exсеllеnt blοg you haνe hеre but I wаs ωοndering if
you knew of any forums that cover the sаme topics talked аbout in this аrticle?
I'd really love to be a part of community where I can get comments from other knowledgeable people that share the same interest. If you have any recommendations, please let me know. Cheers!
Here is my web page ; my ex has a new girlfriend

Anonymous said...

Today is human rights day. Everyone should go and read those rights and you will find out for yourself how much everyone is being shortchanged by pigs. we have to vote in more alternative paties to restore our human rights.

Anonymous said...

Based on wikipedia- singapore car ownership is at the same league of not rich countries. why cant we be more like monaco which is also a small country?

1 Monaco 908 2009[1]
75 Nauru 159 [21]
76 Singapore 156 2009[1]
77 Republic of Macedonia 155 2009
78 Algeria 154 2010 [22]
79 Jordan 154 2009[1]

Anonymous said...

So only 3 in 20 owns a car which means 1 is a foreigner, 1 is a PR and only 1 is a Singaporean (probably pap related). In conclusion, PAP did a very poor job in elevating our standard of living despite being so highly paid. Where is the justice?

Anonymous said...

@ "Where is the justice?"

Singapore Fairy Tale #1.
------------------------
Limpeh kali kong;
"We are the PAP.
We care about Singaporeans.
We want to better the lives of Singaporeans.
We are working for your benefit"

Anonymous said...

Only 3 in 20 own a car - the foreigner own the super car, the PR own the car, the Singaporean own the van trying to make ends meet by making delivery at night and working in a desk job by the day. Vote any party other than pap will definitely make your life better.

Anonymous said...

you don't hear this thing from GY. Fucker GY went out to serve only himself in his 22 years of political service... all he can talk is his exam success in schools.

Anonymous said...

I have a secret worry that 20 or summat years down the line, Alan Beattie writes another book titled "False Economy 2 - Singapore, a case in point".

WAIL... save us o god of no mercy!

Anonymous said...

Sounded a bit like the other book lucky reviewed "why nation fail"?

They all seem to champion demoncracy and offer no original idea

Anonymous said...

u want original? look to the ancient word