Bolivia

[VetLegion]

Already mentioned China. Hong Kong and Singapor are city-states based on trade, they have no other hope of creating markets than opening themselves to trade. Taiwan and South Korea were actually VERY protectionist in certain industries after WW2. They would protect vital industries for a time, then open them once they were competitive. You should read up on their economic history too.

Keep track of the context, will you? You wrote about welfare states, I quote:

The most successful economies in the last 10-20 years have been those which have large welfare-state oriented-governments.

There is nothing welfare about the fastest growing countries in recent history. Protectionism is another thing.

I dare you to give me an example of one single large country (i.e. Mexico-sized) which has not used protectionist or centralized measures in the course of their development.

All countries I know of have used protectionism to some degree at some time in their history. This is not the issue being discussed.

[VetLegion]

Originally posted by Master Zen You are talking about communism, not socialism. There's a big difference. Socialism is present in various degrees in capitalist countries and the examples I've been pointing out are clearly of the social-democractic capitalist type.

Yeah, social-democratic can work, but only in near-zero corruption enviroment. Which means: ethnically and culturally homogenous states with lots of social capital.

Then I wonder why the crime rate among Mexicans in the US is nowhere near as big as in Mexico...

It's three times that of the white US population.

I have never bought the social capital argument. Sure, it definitely exists, but not to the degree its adherents believe it to exist. I've lived in too many countries to know for a fact that people change the moment they step into a foreign border. Social capital theory does not explain that.

People can adapt if they have to. But if Mexicans become a majority in USA, and start to control courts, police and politics, it is going to become another Mexico, no doubt about it.

Institutions are based on history and culture among a gazillion other things. You can't copy them because no two countries are the same. You don't think of the insititution first, you think about the purpose that institution is to have, then you design it in accordance to the country's peculiarities.

All institutions are basically OK. I don't think I could find flaws in Mexico's constitution, or organization of Mexico's courts. I think that on paper it's just fine. But it's still relatively corrupt country. Can you tell me why?

In any case, you already shot down your previous argument. If you can't copy institutions (which are made of people as you claim), why are you so confident that you can copy an economic model... which is also built around people and expect it to work just because it worked elsewhere?

Capitalism is natural to humans. We don't pool and share stuff, we sell it to each other. If you call that a system so be it, but it's really just letting people do what they want. It can work anywhere because of its simplicity. I hope I don't have to explain why it's efficient. You mention economics textbooks all the time, I hope you read some

[LordShiva]

The more power you give a government, the greater the profit from corrupting it.

[Heresson]

Hail the ancient wisdom of India!

[VetLegion]

I'm starting to get intrigued. What is the introduction to economics textbook which you are quoting? Who knows, might have been the same one I used 8 years ago when I started my major.

I'm not quoting textbooks verbatim. I take a look at Latin American countries and I see countries whom I think should be more economically prosperous than they are. We can disagree as to how to achieve that. I think it's impossible to draft laws without flaws. I think that it's more or less futile to try to design uncorruptible institutions. It's does come down to people.

In a situation where people aren't ethnically and culturally homogenous, market transactions are the best way to insure fairness.

And if you knew your business history you'd know that the incientive to generate monopoly profits is at the core of every industry, perfect competition is desirable to consumers but completely undesirable to producers. The tendency therfore is for markets to generate monopoly profits

How many monopolies can you name that have managed to become such without government intervention on their behalf?

We HAVE reduced them, we have an even lower percentage of government spending than Japan compared to your previous post. Goes to show how much you know about Latin American economis (not much). Heck, Mexico has one of the lowest government spending rates in the region... pretty much throws your argument into the dustbin.

Share of budget spending in GDP is just one of indicators of government involvement in the economy, not the only one. There's direct government ownership of companies, regulation, etc.

China... laissez-faire????

China has one of the most centralized economies in the world.

PWNED.

You asked for examples where government retreat from the economy did good for the economy and I gave you China. That's like the ultimate megaproof.

Again you are quoting neo-classical economics straight from a textbook. Empirical reality is otherwise.

Empirical realitiy shows us a couple of things you won't like. It shows us that people matter for economic success. You wrote:

Neoliberal Chile is a success because its institutions work. Social-democratic Sweden is a success because its institutions work. Should Chile turn social-democratic and Sweden turn neoliberal, I'll be willing to be they'll still work.

You base your prediction (which I agree with) on "institutions" (which BTW. change or dissapear with change of economic systems), but if you're fair you'll admit it's about the people.

On a related note, this is not politically correct, but you should check it out:

http://en.wikipedia.org/wiki/Iq_and_the_wealth_of_nations

It shows average Mexican IQ to be 87 on the scale where US' is 99. IQ seems to be pretty correlated with GDP/capita. Are you really comfortable with discussing empirical reality?

[LordShiva]

For most of the 185 nations, no reliable studies are available. In those cases, the authors have used an estimated value by taking averages of the IQs of surrounding nations. For example, the authors arrived at a figure of 84 for El Salvador by averaging their calculations of 79 for Guatemala and 88 for Colombia.

That is probably the most ridiculous Wikipedia article I've ever read.

[VetLegion]

There are some very strange results. Argentina's bad performance considering the average IQ, and the result of only 94 for Israel.

Also, correlation doesn't imply causation, so it could be that wealthy countries cause high IQ's (and not vice versa), but this is still interesting stuff.

[LordShiva]

It would be an interesting result if the methodology were more sound. Right now, it's a joke. Which is probably what we deserve for letting psychologists and political scientists talk about economics.

[VetLegion]

The methodology is sound, from what I can see (I don't have the book). This book is only a part of a bigger tide. IQ research is gaining momentum and making a comeback in the last decade. The results and implications are not politically correct, so it will be interesting to see how it plays out.

[GePap]

In terms of land locked or not, Switzerland was a pretty poor and backwards part of Europe for a long time. Its great wealth is historically relatively recent.

[LordShiva]

Some excerpts from the article:

For People's Republic of China, the authors used a figure of 109.4 for Shanghai and adjusted it down by an arbitrary 6 points because they believed the average across China's rural areas was probably less than that in Shanghai. Another figure from a study done in Beijing was not adjusted downwards. Those two studies formed the resultant score for China (PRC).

In many cases, the IQ of a country is estimated by averaging the IQs of "neighboring countries" that are not actually neighbors of the country in question. For example, Kyrgyzstan's IQ is estimated by averaging the IQs of Iran and Turkey, neither of which is close to Kyrgyzstan – China, which is a neighbor, is not counted as such by Lynn and Vanhanen. Such arbitrary selections of "neighbors" raise additional questions as to the objectivity of the IQ estimates.

To account for the Flynn effect (an increase in IQ scores over time), the authors sometimes adjusted the results of older studies upward by an arbitrary number of points. Because of these arbitrary adjustments and the fact that only limited data were available for most nations, the figures should be considered rough estimates.

A review of the book in Contemporary Psychology (49 (4). pp389-395. Barnett, Susan M.; Williams, Wendy) stated: "In sum, we see an edifice built on layer upon layer of arbitrary assumptions and selective data manipulation. The data on which the entire book is based are of questionably validity and are used in ways that cannot be justified."

The book is sharply criticized in a peer-reviewed paper The Impact of National IQ on Income and Growth [1]. Although critical of the IQ data, for the sake of argument the paper assumes that the data is correct but then criticizes the statistical methods used, finding no effect on growth or income.

The figures were obtained by taking unweighted averages of different IQ tests. The number of studies is very limited; the IQ figure is based on one study in 34 nations, two studies in 30 nations. There were actual tests for IQ in 81 nations. In 104 of the world's nations there were no IQ studies at all and IQ was estimated based on IQ in surrounding nations.[8] The number of participants in each study was usually limited, often numbering under a few hundred. The exceptions to this were the United States and Japan, for which studies using more than several thousand participants are available.

[GePap]

Originally posted by VetLegion
The methodology is sound, from what I can see (I don't have the book). This book is only a part of a bigger tide. IQ research is gaining momentum and making a comeback in the last decade. The results and implications are not politically correct, so it will be interesting to see how it plays out.

Which is a sad state of affairs really. Trying to explain levels of development based on IQ is a pretty stupid field personally, which makes even less sense when you think about the ehtnic and racial hodgepot that is the New World, with all that genetic mixing.

[Barnabas]

Argentina still had a southern european standard of Life in the 70´s, (altough since the 50´s the economy was relatively stagnant , growing, but not as fast as most economies after ww2)
And had been one of the wealthiest countries in the world since the 1870´s (which makes more or less a whole century of prosperity)

The dictatorship in the late 70´s ruined them (which was very free market right wing pinochet style dictatorship),
altough probably the communist and peronist guerrillas which had put the country in chaos and gave an excuse to the military for taking power are also to blame, in some degree

In the 80´s they struggled with their foreign debt (which had jumped from 3000 to over 45000 million dollars during the dictatorship) and the high interest rate of reagan times, and in the 90´s everybody remembers what happened, basically they lost 2 decades and a half.

After the crisis of 2001 the argentine gdp per capita was the same as in the 70´s before the dictatorship.

Now the economy has grown at 9% per year for 3 years in a row(2003, 2004, 2005), and will grow over 7 % this year too, and predictions for next year are even better because of all the money the gov may spend to get reelected.
I think the country will do good, because now they have a real and sound economy, superavit in exports, superavit in gov spending etc
the 1 peso 1 dollar was all a fiction which could not be sustained, ruined and indebted the country

[Barnabas]

Ge Pap

I think Armenia would be a better comparison, because of their problem with turkey, it is not only about being landlocked, it is also about what neighbourhood you are in

Bolivia has to befriend Chile to prosper, it is missing what could be their biggest markest and the easiest way to export due to what happened more than one century ago.
Imagine if mexico had no diplomatic relations and did not trade with the USA

[VetLegion]

LordShiva, GePap,

This is not a thread to discuss this, but what we've all been trained to believe, that we are all born the same and formed by the enviroment, is not standing up to scrutiny. To those interested in the topic, I recommend this blog: http://www.gnxp.com. They write about nature/nurture issues all the time.