I have just finished reading How Rich Countries Got Rich . . . And Why Poor Countries Stay Poor by Erik Reinert. The book is interesting for it engages what should be the main question of economics, why are some countries rich and other countries poor? This crucial question is woefully under researched and barely discussed in mainstream economics. I have completed two years of economics study in university without yet having heard an explanation for this phenomenon.
Reinert’s main argument is that the wealth of a nation is based upon the economic activities it specialises in. Poor countries are poor because they specialise in agriculture and the production of raw materials. This is an economic dead end as it does not allow for increases in productivity or innovation, which is how countries get rich. On the other hand, rich countries got rich by industrialising and building up a manufacturing base. Continue reading “How Rich Countries Got Rich . . . And Why Poor Countries Stay Poor”
Once upon a time there was a car manufacturer. One day he proposed to double his workers wages. The business community was stunned. Was this man insane? A socialist? Did he not understand the laws of economics? Surely his business would instantly go bankrupt and nothing more would be heard of him. In response he simply pointed out that with a wage increase his workers could now afford to buy the cars they made. Business boomed, profits rose and the company redesigned the entire car industry. The man’s name was Henry Ford. Continue reading “Pay More, Get More”
Decades after the Civil Rights Movement, Black workers earn significantly worse than White workers. The gap is either 40% or 25% depending on whether the average or median census data is used, but the fact remains that there is a large gap. Why is this the case? Is it due to discrimination or is it because of better skills and education levels among White people? Continue reading “Why Black People Are Paid Less Than White People”
Einstein once defined insanity as doing the same thing over and over again and expecting different results. For four years the government has being cutting spending and raising taxes. For four years we have been told it is the only way to reduce the deficit, restore growth and create jobs. Yet four years later we still have a large budget deficit, high unemployment and the economy is still contracting. Continue reading “Why Austerity Isn’t Working”
We are in the midst of the worst recession since the Great Depression. It is therefore logical that we should see how that recession was ended for solutions to our current problems. It was solved by Continue reading “How To End The Recession”