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Friday, 4 November 2011

G20 and the Great Shift

Russia, China, Brazil, Australia, Canada and India are now the leading 'rich' counties: the USA and the Eurozone are literally begging from them. The per capita incomes of Chinese, Indian and Russian workers are vastly lower than those of Europeans - especially of Greeks - and it is therefore apparent that a country can be rich while its people are relatively poor, and a country can be struggling economically while its people are still rich on any global comparator.

The Economics that prevailed from 1870 until 2008 cannot explain this: indeed, that Economics created the incomprehension that allowed the situation to come about. The whole nonsense must be replaced. No tinkering can be beneficial.

Russia and China are dubiously democratic, and are in no way ashamed at that, provided they continue to deliver tangible economic benefits to their people. India is massively corrupt, to an extent that democracy is frequently subverted; but is delivering massive economic growth and a diffusion of consumer goods that was unimaginable even a decade ago. There is no evidence as such that democracy is good for an economy: though Canada and Australia are fine examples of the marriage of democracy with prosperity.

 The dogmatic assertions of US politicians that democracy is the best system for all purposes in all places no longer carries any credibility. People who live with democracy and prosperity are lucky: and on a world-historical basis they have only been a tiny minority of the people who have ever lived. Democracy delivered fake prosperity to Western Europe and the USA between 1980 and 2010; by abusing the real prosperity that was accumulated by investment over the previous two centuries only to be dissipated in two World Wars and by deficit-financed consumerism.

The democratic consumer spree was never credible. Ken Watkins and I said this in our book Can Britain Survive? that was published forty years ago: long before the fake boom really gained momentum. Politics has failed the people as much as has Economics: and the people know it!

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