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April 18, 2008

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ms

Right on! Some recipients of western welfare have said NOT to send more money - it simply gets siphoned off by petty beaurocrats and does not trickle down as far as the needy, thus perpetuating or even elevating the level of distrust.

Alex Marshall

The name of the book is, I'm guessing, a play off of Adam Smith's (the "founder" of modern Western economics) book "The Wealth of Nations." So its half-way clever... I wonder if he's intending to critique Smith's ideas or critique how they are being implemented (seems to be the case from your description) or something else entirely.

I would definitely agree that "prosperity" (using that in a purely economic way) is significantly limited by your intangible capital, especially human capital. Side note- this is actually a problem the west is about to be facing in a huge way with the retirement of the "baby-boomer" generation, which doesn't just mean strain on social security, but a huge depletion of our workforce that won't be fixed for a long while.

What's interesting to me is that the conditions that we talk about that are necessary for good human capital- a good justice system, a basically non-corrupt government (as we well know in the states, corruption always exists), defined property rights, etc., all developed in the west as a result of increased economic development. In other words, there wasn't a one-first, then the other, process. They happened simultaneously. As the middle class emerged, the legal system that favored the aristocracy was no longer acceptable, so they demanded reforms that led to the democratization that defines the west. So this leads me to think that perhaps the best strategy for us in the west to help these things develop in other parts of the world is to promote active trade with them so that their internal economies grow, putting pressure on their governments to change. This process has already had tremendous effect on places like China, which now has opened huge swaths of its country to free-market trade, the result being a slow democratization of their government (obviously, Tibet is not one of these fortunate areas of China).

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