Arnold Kling  

The Hopeful Science

Motives and Consequences... The Myth of Time Preference...

Richard Cooper writes,

Development as a global policy objective dates from the 1940s. Relative to expectations then, the world economy performed outstandingly well during the second half of the 20th century.
Worldwide growth in average per capita income exceeded two percent a year (historically unprecedented), many poor countries became rich, infant mortality declined, diets improved, longevity increased, diseases were contained if not vanquished. Poverty on the World Bank
definition of $1 a day (in 1985$) declined dramatically, and the number of persons in poverty was halved despite a more than doubling of the world population.

Cooper's point is that the state of the world's economy should be measured not just against some improbable ideal but against reasonable expectations as of fifty years ago. The entire paper is worth reading. Thanks to Adam Smithee for the pointer.

Along similar lines, Ronald Bailey writes,

Even though some of the world's poorest people are not earning much more than they were two generations ago, they're still living much better than they were. In fact, many quality of life indicators are converging toward levels found in the richer countries.

Bailey cites the work of World Bank economist Charles Kenny, who points out that infant mortality and literacy have shown dramatic improvement in even the poorest countries.

For Discussion. What would be reasonable expectations for the state of the world economy fifty years into the future?

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CATEGORIES: Growth: Consequences

COMMENTS (12 to date)
Randy writes:

I'd say continued growth at the same rate or perhaps even faster. Primarily because the world is very nearly free of barbarians. While nations with enormous military capability still exist, these nations are interested in wealth, not conquest.

dijit writes:

Continued average growth of 2-2.5% is expected.
USA maintains its economic position.

The fastest growers of the last 50 years do not continue to do so, the list of fastest growers will be completely new and unexpected.

A collapse in most oil-based economies as oil reserves are depleted and less-expensive alternatives replace oil - (electric cars run on power from nuclear plants). Most such economies will not be prepared to have their oil riches disappear, but a few will.

Aging populations in Europe particularly and USA to a lesser extent grow to be a significant economic factor. The burden of fewer workers supporting more retirees will increase due to lower birthrates and medical technology increasing longevity. USA will largely get through by increased automation, outsourcing, and immigration; Europe will have much more difficulty adopting these solutions and their economies will suffer as a result.

Global climate change will emerge as a factor, as some areas become more fertile and others less so. This will, unfortunately, adversely burden some of the poorest-performing economies: undiversified agricultural-based ones. Genetic engineering will help mitigate some of these effects for those willing to accept genetically modified crops - perhaps leading to unexpected entries in the "fastest growing economies" list.

John Brothers writes:

In 50 years...

We will have robots to do virtually all menial chores, virtually all dangerous jobs. Freed up from the need to produce basic necessities, a significant number of people across the world will turn their focus to various more creative arts.

Our oil reserves will remain at "30 years proven". The air will be cleaner across the globe because of the ubiquity of hybrid and electric vehicles. We will have very efficient solar, geothermal, wind and nuclear power solutions across the globe.

There will be massive unrest along the way as people feel threatened, and it will not be a complete turnover - there will be countries and people who suffer in this environment, and liberals will ignore the massive progress and act like it's all our fault these people are suffering. Even in spite of the fact that the number of people in poverty will be half or a third of what it is now, and even then, those people will live quite well on less income.

The world's population will continue to grow slowly, ahtough it is possible that it will start to grow quickly as people have more leisure time and require less to make ends meet.

People in scientifically advanced nations will live to 150, and you and I will blog and laugh about how 50 years ago we thought that we were living in advanced and exciting times.

The demand for oil will grow for a time, and then plummet, which will eliminate what despotism remains in the mid-east. I'm pretty sure that virtually across the globe we'll have democracy.

In advanced countries, personal privacy will be an ancient legend. Kids won't care, because they will have grown up in a no-privacy environment.

Politicians will have to be more honest, and their backgrounds will be very thoroughly scanned.

Lawyers will make a lot of money, even by the standards of 50 years out.

The Diamond Age, by Neal Stephenson, will seem prophetic to some degree.

jaimito writes:

There will be another serious world war, probably for oil, which will cause widespread destruction and penury, and also fantastic technological progress. Manual and most intellectual labor will become irrelevant. Geriatric elites will spend long and healthy lives on islands unshown on maps.

Lawrance George Lux writes:

The Naysayer rides again! The World economy will stall somewhere around 2020-22. This will be the result of shrinking Labor force, higher Resource costs, and hitting a technological boundary on current Production methods. Standard of Living, though, will spread with Highs and Lows converging upon the Median.

Real Disaster predictions for Up and Coming Libertarians: The International Corportate structure will fail; they will not disappear or disintergrate, simply speacialize to detailed Product supply. Stock Markets, and Markets in general, will lose their power to generate wealth; Products will become relatively standardized in Price and Function with Quality and Durability demanded. Wealth generation potential will come from Owner/Manager Profits of sustainable small Production units, based upon uniform technology and geographical location to cut Transportation costs. lgl

spencer writes:

Time and time again I see you post about how great the economic future should be and it seems obvious that you are an economic optimist.
If this is true why are you such a pessimist when you discuss social security. You have made argument after argument that the ss projections are too optimistic.

Aren't you being fundamentally dishonest with you
economic optimism everwhere except when it comes to SS?

Randy writes:


The same thought occurred to me when I made my first point above. Why do I believe that Social Security (in its current form) is destined to fail while believing that the general economic outlook is quite good?

Answer; I think the risk structure of Social Security (passing on all risk to the future) makes the program the political equivalent of a junk bond. But, I also believe that replacing the program with a pure welfare system (its original intent) will not be as bad as many believe. And I do think that is exactly where the program is headed.

mark writes:

Flying Cars

spencer writes:

Flying cars were the big idea at the 1939 Worlds Fair in NY.

Try a different scenario. We continue to have the same policy that are now being implemented in
Washington. This continues to massively increase the US debt to foreigners. Meanwhile we cut investment in public capital like roads, healthcare and education. Consequently, the generation born 20 years from now does not get the education of earlier generations. Moreover, technology leadershift shifts to Asian countries that had wide scale public education in science and math. Second, because of the US inability to service its debt the govt shifts to massive printing of money and the US experiences hyper inflation. This causes the stock market and the banking system to collapse so the real economy stagnates at best and living standards suffer as the US experiences major recessions every few years.

Not real. Remember, 50 to 100 years ago if you were a British portfolio manager or a European immigrant to the new world you could have had a very serious debate as to which country had the best prospects -- the US or Argentina. Poor government policies caused Argentina to be the only country in the world to go from being a first world nation to being a second world nation. It can happen.

To me good public policy is a partnership between the government and business to support each other. While the ideas of markets doing everything has a certain appeal, why has there never been a single example of a single country
breaking into the ranks of first world countries without effective government proving major investments in such public capital as infrastructure, education and healthcare?

Lancelot Finn writes:

One major factory in the future world economy: the rise of China. My take here. And a teaser:

At some point in their lifetimes, probably in the next two decades, the generation of Americans now in their 20s will face a dilemma similar to that which Britain faced at the beginning of the 20th century.

Read on over at my website.

Prosperous and powerful, admired for its constitution and its currency, mistress of a web of influence and involvement that girdled the globe, the heritage of decades of commerce and diplomacy backed by occasional application of military force, fin-de-siecle Britain nevertheless began to sense that the lofty task it had undertaken was more than it had the strength and virtue to accomplish. Its population was too small, its economic dynamism was tapering off, its moral self-conviction was faltering and succumbing to doubt. True, a long recession had just passed, and Britain was enjoying a period of high esteem and good fortune. But intelligent Britons knew that this was not a zenith, but an Indian summer.

Britain’s task was the civilizing mission of the Empire. The task for which America’s strength will not suffice is the spread of free markets and democracy around the world. We are different: but similar enough that it is worth looking to Britain’s example.

Jad writes:

As will soon be clear to all, I’m not an economist, but:

For the moment, let us assume that the “Advance of Freedom and Liberty” around the world progresses in the manner that is popularly hoped for in the developed countries of the world. When the newly enfranchised people of newly develop(ed|ing) countries begin to demand for themselves the provisions of government that we “enjoy” (schools, hospitals, infrastructure, etc.), won’t the cost of doing business with those countries necessarily increase?

I don’t want to be overly pessimistic, nor to ascribe blame, but I think we can agree that there exists a sizeable segment of our (American) population that are able to maintain a minimal lifestyle based on the low cost of goods and services in our country. If the costs of labor and raw materials that we procure overseas increases, some part of our own citizenry will find their already precarious situation has become entirely unsustainable.

The cost to western businesses (whose purpose, to some extent, is to coordinate the buying, transporting, processing, marketing and selling of foreign resources) will also increase, and corporate restructuring of some sort will need to take place.

If a casus belli can be concocted at this point, I can imagine the U.S. involvement in further hostilities abroad, both to ease unemployment, to redirect domestic anger, and to secure favorable conditions in foreign market(s).

I realize this discounts the arrival of ameliorating factors such as technology. Also, the timeline on this is probably skewed in my mind. I am aware that there will be inexpensive labor and materials available for exploitation around the world for many years to come.

What other assumptions need to be reexamined? If anyone can comment on existing economic theory that speaks to the problem of an increasingly prosperous, educated, and politically active (or at least democratized) global working class, I’d appreciate the pointer.

Scott Peterson writes:

Randy's comment about the lack of barbarians is flatly wrong. The sole reason for the shortage of rogue states is the foreign policies executed by the United States of America since the presidency of FDR. The USA since that time has dealt benevolently with its defeated enemies(see Germany and Japan), has been the leader of resistance to wars started by rogue states(see Korea, Iraq), led a coalition that defeated a morally and economically bankrupt political system(see Communism), and has now kicked off a movement toward democracy throughout Asia where the revolutionaries are basing their actions in part on the idea that they will receive US support(Iraq, Lebanon, Ukraine, Kyrgystan).
Should the US withdraw from East Asia, China, Japan, Korea, and Russia would be at each other's throats in a very short time. In short, the USA's actions have proven to be stabilizing in terms of relations between nations and beneficial to the standards of living of people everywhere.
Granted, not every American decision has been right but the general trend has been good for the world.

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