The Road To Global Prosperity
2014 Michael Mandelbaum
This book is a mild polemic, a reference to and support for Dr. Mandelbaum's views about the world economy. It is more useful as justification for present-day policy than as a tool to project hypothetical perturbations into the future. Technology plays an undersized role ("internet", "standards", "space", and other terms do not appear in the index). The book is useful primarily as insight into the minds of future American policy makers attempting to remake the world. The book does offer useful observations, less useful interpretations, and dodgy conclusions.
In the author's world, the United States is the world's policeman and manager, keeping the trade routes open and the factories producing optimized goods efficiently. The quote leading chapter one, by Lord Palmerston in 1860, says much: "... Trade cannot flourish without security, and that security may often be unobtainable without the Protection of physical force." Mandelbaum does not note this, but Lord Palmerton was the Machiavellian prince whose policies alternately supported and attacked the Mandarinate in China, talking nonintervention while physically attacking the Taiping revolutionaries in China, actually damaging British trade and industry as the American civil war cut Britain off from its prime source of raw materials and markets in the American south. Machiavellian manipulation sans omniscience can do more harm than good.
"Road" has useful insights about the undue influence of concentrated anti-trade interests on politics, to the detriment of broad public good. Tariff protection of old industries from foreign competition is a familiar refrain. The author does not note this, but tariffs on old industries provide economic support for new industries. Buy a smart phone assembled in China, and no American smart phone workers lobby Washington for tariffs, because there never were any American smart phone workers. However, the $200 spent on the smart phone is not spent on garments or movies or other goods protected by tariffs and trade laws. The author does not connect the dots to the notion that politics is typically the amplification of special interests at the expense of the public, or that "trade protection" in one market segment shifts spending to less protected markets.
Immigrants: yes, the United States is crippling itself with anti-immigration policies. Canada's open immigration policies have benefited them, accelerating growth there almost as much as redistribution and central control have damaged them. Canada and the United States are NOT the same, but are more similar than most countries, and the invisibility of Canada in this book (it only appears in lists of countries) shares a blindness with all books of this genre. This great "natural experiment" can tell us a lot more, and books about national economics and the differences between nations should look far more closely at the effects of similarity.
Money: "arbitrage" also does not appear in the index, nor does Paypal, eBay, Amazon, Alibaba, or bitcoin. Governments can manipulate currencies and pretend to manipulate the counterflow of goods and services those currencies measure. If governments attempt to "pump money uphill", private actors will prosper moving the money back where it wants to be. The US may attempt to throttle the flow of technology with ITAR (also not in the index), but millions of packages cross borders daily with interdicted technology. It is easier to buy Intel processors from Hong Kong via eBay and paid by Paypal than to buy them from Intel's main factory ten miles from my house. Shipping times to Oregon are faster from China than from Florida.
BRICs: This chapter is the reason why I borrowed the book from the library; Brazil, Russia, India and China are the experimental laboratories for the next world economy. Russia is interesting as it probably does not actually belong with India and China. Knowledge is not in the index, nor are universities, yet it is the broad availability of useful knowledge that transforms a country into an economic powerhouse. Both China and India have revered scholarship for centuries; although both are plagued with authoritarian scholarship in the humanities, technology and science have been relatively free of top-down nonsense, an incentive for the best minds to train and work in these areas, with obvious economic consequences. China had Deng to open its economy to development, India had Kalam, and Modi may continue to free India's national economy as he did for Gujarat - that (and not his alleged mismanagement of Hindu/Muslim conflict) is what he was elected to do. China and India will turn their economic surplus into STEM education for their children, creating more economic surplus for generations to come.
Russia is the STEM country of the past - they also had a very strong emphasis on technical education and industrial modernization, and moved from feudalism to Sputnik in half a century. This was paired with the paranoid brutality of Stalin and the resulting insane government, misallocation of resources, and environmental rape. The fall of the Soviets opened the country for international environmental rape, preserved vestiges of insane government (Putin isn't Thomas Jefferson or even Gorbachev, but he isn't Stalin), and may have starved education (how many international students study in Moscow today?). If Russia burns through its oil while letting its population sink into ignorance, it will die in military spasms. Road does not mention the Crimean conflict (oil with a veneer of ethnic nationalism) or future conflicts over the oil and gas under the Arctic ocean (with the US, Canada, and Norway). If Russian talents atrophy for everything but extraction, the country will end as a failed petrostate. Even the Saudis and the Emirates are plowing some of their temporary wealth into higher education.
It is easy to confuse dollars with wealth, which is like confusing surveying tools with acreage. "The Globe" is a ball of rock, an ocean and atmosphere, an ecology, and the human mind, an epiphenomena of the rest. The globe as we perceive it is the interaction of those minds, and the more freely those minds can find each other and maximize the commerce between one other, the more prosperous those minds can become. "Economies" and "nations" have meaning if they facilitate those transactions; if they become an insurmountable impediment, they will cease to exist, in the worst case taking their citizens with them. By and large, I am hopeful that people will connect globally, create their own prosperity, and drag their governments into an open and peaceful future.