Questions that are rarely asked

by on June 2, 2011 at 2:20 pm in Books, Economics, History, Uncategorized | Permalink

To Oded Galor:

As the father of unified growth theory, what does it mean to have a single theory that accounts for the entire growth process since the dawn of civilization?

The answer and full interview is here, concerning Galor’s new book Unified Growth Theory.  Here is an earlier interview with Oded Galor.

Daniel June 2, 2011 at 2:53 pm

The most important thing (I think) is that Galor treats population growth as an endogenous variable making the model immediately more applicable to the general situation. It’s basically a growth theory application of Becker and Lewis’ family model(s).

E. Barandiaran June 2, 2011 at 4:55 pm

Galor’s answer to the last question:
“The most promising and challenging future research in the field of economic growth in the next decades will be the examination of the role of historical and pre-historical factors in the prevailing disparity across the globe, and the analysis of the interaction between human evolution and the process of economic development. The exploration of these vast and largely uncharted territories may revolutionize the understanding of the process of development and the persistent effect that deep-rooted factors have had on the composition of human capital and economic outcomes across the globe, fostering the design of policies that could promote economic growth and poverty alleviation.”
Two comments.
First, I’m optimistic that his approach can be expanded to include “institutions” as the main mechanism of interaction between human evolution and the process of economic development. To succeed, a clear understanding of how social order emerges and differs across societies is necessary (Fukuyama’s last work is important but far from enough because he’s concerned mainly with political order –hope he is going beyond it in the research for the second volume).
Second, I’m pessimistic about his point on the design of policies. Scientific and historical knowledge let us to understand what it’s not possible, but not what it’s effective to achieve a particular objective. I hope he is not concerned at all about the policy implications of his research.

spencer June 2, 2011 at 4:56 pm

The thesis appears to boil down to the what drives growth is expensive labor. Expensive labor is educated labor that has capital embedded in it and that is complimentary to physical capital that generates greater per capita output.

This idea sure seems to directly contradict libertarianism where they seem to believe that the answer to everything is cheap labor that works against rising capital per worker and productivity.

Note that the great stagnation seems to coincide nicely with a sharp slowdown in US growth of real capital spending per employee. If so, the great stagnation really stems
from the political success of the right wing in forcing low real wage growth on the US.

Samuel June 2, 2011 at 8:06 pm

Libertarians aren’t for or against lower taxes. They ‘support child labor’ because they support global trade, for the freedom of exchange and for efficiently allocating resources. The cheap labor we outsource our manufacturing to is actually expensive labor compared to the alternative. Benjamin Powell’s wage survey comes to mind where even many exporting sweatshops made twice to five times the average wage. These are also some of the same emerging markets that are experiencing very fast growth.

Samuel June 2, 2011 at 8:07 pm

should read wages in the first sentence. blep

Cliff June 2, 2011 at 8:29 pm

It’s pretty extraordinary for someone to claim that Libertarians “support cheap labor”. What they support is freedom!

John June 3, 2011 at 9:09 am

Cliff

You support the result you accomplish. Libertarians support cheap labor. If they supported expensive labor they would support other means, methods, and ways of thinking to also support freedom.

Second, child labor laws do not result in efficiently allocating resources–such have the opposite effect—they make it possible for the inefficient producer to still compete on price.

Dan Dostal June 3, 2011 at 10:32 am

Socialists believe in freedom too. You may need to expand on your principles.

J Thomas June 3, 2011 at 11:03 am

Saying “Libertarians support X” is a lot like saying “Christians support Y”. A big diverse collection of people who disagree about everything except some very abstract words.

And yet sometimes it can have some sort of meaning to say “Christians support Y”.

The main thing I’ve noticed that Libertarians have in common, is in my experience most of them are angry at their fathers. But this varies. When I find a libertarian and get comfortable enough with him to ask him whether he’s mad at his father, he tells me in detail what he’s mad at his father about. But when I say that Libertarians are mad at their fathers, almost always they deny it.

Anyway, I can imagine the reasoning here. If a child is not granted the freedom to sign a contract that legally binds him for the next 50 years, we wind up with three classes of people — the people who are free to sign binding contracts, and the people who are not, and the people who decide which is which. It is *less free* than letting everybody sign their freedom away.

Also, why should children be legally controlled by their fathers until they reach some arbitrary age?

Fr. June 4, 2011 at 12:06 pm

Implying that non-Libertarians support non-freedom?

A five-year-old would dismiss the point (“bring me a five-year-old!” then said Groucho Marx). The only thing that Libertarians support in significant excess amount to most other ideological positions is Rand-style arrogance and utter foolishness.

jorod June 2, 2011 at 10:16 pm

I think it had more to do with conquering fear and the development of mathematics. Theory alone is not enough. Someone had to try it out. Knowledge itself is dependent on memory. Better records made memory better.

As far as economic growth, I think Julian Simon addressed it in his paper on population growth and freedom.

TallDave June 2, 2011 at 11:20 pm

Looks interesting.

Chris June 3, 2011 at 7:11 pm

The Elliott Wave Theory does just what he’s trying to do, albeit a bit more crudely. It even explains how during certain times (or certain “waves”) the disparity of wealth grows or shrinks.

Dave June 5, 2011 at 9:52 pm

Fascinating staff

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