A Place to Stand

  Joseph Friedlander has written a guest post on Next Big Future on why the astonishing scientific breakthroughs seen almost daily and reported on that site, haven't led, at least in the developed world, to fantastic growth rates.

   Spoiler alert - Joe has quoted later in the article from me several times and once from Adam Smith, so it may be argued that the fact that his conclusions are similar to mine is not fully independent support. On the other hand if he gets no factual or logical dispute either, just as I have not had either here or on ThinkScotland, it does tend to confirm that we have got our facts indisputably correct.

    "Tyler Cowen's 'Great Stagnation' (explaining the rather disappointing future we live in compared to projections of where we would be by now) makes (most famously) the ‘we ate the low-hanging fruit’ argument that the easy things have been invented and the high yield moves made, and thus the economy faces the point of diminishing returns--...

   My own understanding is that a number of things are necessary for economic growth and prosperity:
1. Freedom of endeavor (which I define more completely below, but basically an environment in which your every move is not checked in advance by powerful connected parties in government, professional associations, cartel-like groups in the economy, and in which your surplus is not siphoned away by the same parties) An environment in which endless permits are not required to start a business, nor endless bribes or legal maneuvering to keep it open, and in which you are free to make your decisions chiefly with reference to your customers’ needs with an eye to future business. The right of freedom of transaction, association and the right to decline unfavorable relationships and transactions.
2. Cheap energy and transport that is reliably available upon demand without political interference. (In some countries in the vicinity of Europe, for example, car prices are double USA prices (taxes and customs) and gas is $10 a gallon. In the USA many poor people get started salvaging junk with an old truck and driving it to a place they can get money for it. That would not really be possible with the $10 a gallon gas (and restricting the supply of new cars drives the cost of used cars sky high as well)
3. A tolerable administration of justice, taxation (and what ever governmental functions exist) in the area where economic operations are being undertaken
4. A rule of truth and true (rather than politically-dictated) equality of transaction and information, with no game playing. This means no rigged markets, that no actor is above the law, and that no unquestionable ‘high priesthood’ of favored people get to create lying statistics, (ask yourself why the site Shadowstats exists--)) dictate accounting rules that destroy the ability to discover truth by a simple examination of accounts, http://blog.jim.com/economics/economic-decline.html and it means that ONLY those who lose bets pay them, not the general public getting to bail them out.
5. Reasonable land prices. High land prices are not a sign of national wealth, but rather of real capital fleeing productive uses.
6. Capital that pools for easy investment in new ventures, and is not drained by deliberate inflation or games played by government or the favored connected players’ “patronage economy” or sapped by excess circulation. Capital is like blood or sap—produced at a certain rate, and easily drained out by vampire like parties with not as much interest in sustainability as the producing party. Note that restricting access to capital by elaborate SEC type rules makes it much harder to start businesses while apparently not doing much to stop fraud (Enron existed after SEC, Sarbanes Oxley basically stopped new startup and small IPO formation, http://blog.jim.com/economics/sarbanes-oxley.html "

     The Adam Smith quote is

Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism but peace, easy taxes, and a tolerable administration of justice: All the rest being brought about by the natural course of things. 
Adam Smith

  with which I, or any but the most unbending libertarian would agree. The latter would remove would the "little else" qualification. I am confident that Smith formed his opinions entirely independently of my blog.

   I also added this comment

Taking the low hanging fruit analogy, technology is an extendable ladder. Before the taming of fire the resources of northern Europe and Asia were out of reach. Currently we have the technology, any time we decide to use it, to mine the asteroids. Where the analogy breaks down is that trees get smaller at the top whereas resources, both geographical and in the ability to manipulate them (silicon chips and flint axes are made of not dissimilar material but one can do more with the former) are much larger at the top.

  I strongly reccomend that anybody interested in a successful human race read the whole thing here.


  Bill Willingham, writer of the Fables comic books also wrote on the Great Stagnation, blaming it on the safety culture (not the same as the problem of overgovernment  but largely a consequence of it). He pointed out some interesting cases of where our technology, mostly computer related, is actually far ahead, even centuries ahead, of where we were promised it would be when we were being promised jetpacks, just not in the big visible stuff.
    It is also a good article and wholly independent of the others here.