Pethokoukis

Capitalism: This chart shows what Bono is talking about

081313china

Lots of attention being paid to this quote from U2′s Bono:

“Aid is just a stopgap,” he said. “Commerce [and] entrepreneurial capitalism take more people out of poverty than aid. We need Africa to become an economic powerhouse.”

The above chart is from Gapminder and shows China’s per capita income growth since 1800 vs. that of the US and the UK. What happened to China toward the end of the 20th century? Well, it started doing what America and Britain began doing some 200 years earlier. China started embracing what Bono calls entrepreneurial capitalism. Or as economist Deirdre McCloskey puts it:

The Big Economic Story of our times has not been the Great Recession of 2007–2009, unpleasant though it was.  … The Big Economic Story of our own times is that the Chinese in 1978 and then the Indians in 1991 adopted liberal ideas in the economy, and came to attribute a dignity and a liberty to the bourgeoisie formerly denied. And then China and India exploded in economic growth.  … And contrary to the usual declarations of the economists since Adam Smith or Karl Marx, the Biggest Economic Story was not caused by trade or investment or exploitation. It was caused by ideas. The idea of bourgeois dignity and liberty led to a rise of real income per head in 2010 prices from about $3 a day in 1800 worldwide to over $100 in places that have accepted the Bourgeois Deal and its creative destruction.

55 thoughts on “Capitalism: This chart shows what Bono is talking about

  1. very romantic.. economic boom was caused by ideas! uh oh

    ideas themselves are not necessarily good, it is important to put what they are.

    destroying the environment, selling cheap products to the whole world… are these good ideas?

    what are talking about?

    let peoples to produce what they really need. this is what bono means, i guess and hope. don’t flood them with foreign aid, but educate them, teach them how to be democratic in their homes, don’t support capitalist minded people in those countries. these are what you must do. then let them flourish. don’t compel them to produce relentlessly, madly, inconsiderately for the world markets because otherwise they will end up being depleted and environmentally and socially destroyed at the end.

    this is the evil that we must exorcise!

    • The evil is caused by ignorant and arrogant would-be do-gooders like yourself who don’t know what you’re talking about, but would damn people to a life of poverty and misery just so you can get your jollies off with your envirofascist friends.

      Get a grip. The earth hasn’t even warmed for 16 years, and not even a looney left green panel would back President Obama up when he recently claimed the world is warming significantly.

      • “don’t compel them to produce relentlessly, madly, inconsiderately for the world markets because otherwise they will end up being depleted and environmentally and socially destroyed at the end. ”

        Who said anything about relentless madness? Anyone who has ever even glanced at microfinance capitalist processes will know that production of goods and services by individuals provides more economic benefit and promotes human dignity far more than waiting for the UN to airdrop of sacks of supplies and then fighting with bandits to get a meal. And as far as environmental and social destruction is concerned, Africa could hardly get worse results than they have achieved thus far. Expecting a different result without effecting some change toward capitalist processes would fall squarely in the definition of relentless madness.

    • “ideas themselves are not necessarily good”

      In great enough quantity, ideas are always good.

      What I do know is people trying to decide what ideas are good and what ideas are bad, has resulted in great tides of misery for humanity.

      Your idea that people should produce “only what they really need” has led to mass starvation every time it is tried.

    • Who determines what you REALLY need? You? Do you REALLY need your ocmputer?

      “…them to produce relentlessly, madly, inconsiderately for the world markets because otherwise they will end up being depleted and environmentally and socially destroyed at the end.”

      What does this mean? Is the US depleted? Wealth is the reason you can even think about the environment.

      • Thanks Tom T, Environmental concern is a luxury of the affluent. Poverty strips the face of earth by all creature left with no other options.

    • Environmental quality in the Soviet bloc vs the Capitalist bloc is no comparison. Capitalists are better. Selling cheap products to the world just is a good idea unless you like to increase scarcity and misery so you can feel superior to those who are without.

      What are you talking about?

    • Waaahhhh! My pussy hurts every time I think about capitalism. It’s a good thing capitalism was good to my parents, otherwise I wouldn’t have a basement to live out my 20′s in.

    • “selling cheap products to the whole world… are these good ideas?”

      So if I want to buy a cheap set of screw adaptors for a tripod and camera, and I get them from China from some guy doing business on eBay or Amazon … and that means I and a bunch of other people put food on this Chinese guy’s table and clothes on his kids’ backs which he earns by promoting and marketing a “cheap” product (cheaper than I can get it in my home town — where I can’t get it, for one thing) THAT is bad?

      And who are you to tell me I can’t buy “cheap” products? If I want to buy “cheap” products (so I have more money for my own food and kids? Or so I have money to buy something more expensive here in my home town? Or for no reason at all?) that is my business, not yours. You can go jump in a lake, interfering busybody.

      Get out of our lives, buster.

    • I think what Bono means is “Commerce [and] entrepreneurial capitalism take more people out of poverty than aid.” You know, seeing as how that’s what he said and all. Not to mention there is no better avenue to let people produce “what they really need” than those kinds of mechanisms.

      By the way, North Korea called. Kim Jong Un is giving a speech next week and wants to borrow your last paragraph. I told them it was fine.

    • Free markets, rule of law, and property rights achieve far more value per dollar and more efficient use of resources than any other economic model around. Compare a satellite view of Haiti to the Dominican Republic. Confiscatory economic policies and lack of property rights lead to the complete decimation of Haiti’s trees and resources. The Soviet Union wasted untold tons of material on buildings that fell apart a decade later and they turned an entire sea into a caustic cesspool that would literally burn your skin if you touched it. China builds Potemkin villages that not a single soul lives in and routinely blow up perfectly good freeways and bridges just to build them over again. They literally pay people to do nothing more than dig ditches and fill in holes. Free markets actually strive to achieve results. We all benefit from the toils of the tinkerers from past generations who sought to make life easier, more productive, and enjoyable for the next generation. No longer do we have to spends countless hours just struggling to survive and finding stuff to eat but can rather spend those hours writing a book, inventing a new gadget, or leisurely playing Candy Crush. I think I’ll keep my free markets abiding by the rule of law just as they are and you can keep your utopian hellhole.

      • Look, you all are talking about the soviet union and its satellites all the time, a regime which was collapsed due to other reasons than you suppose…

        I say, free entrepreneurship is not bad. But you should let others to benefit from it. Through double standards you “capitalists” are suffocating the others, less lucky parts of the world. Don’t compare yourself with the soviet union etc. to show off yourself as innocent and as the better choice for humanity. You are no representative of even what Smith was talking about! You are rotten and your money cannot wash you out! Your system stinks!

        By the way, some of you say that US has a very clean environment because of capitalism. Hohoho! I have no idea about it, it can be clean, but not because of your rotten system, but because of legal protection, if there wasn’t any “your” environment would have been destroyed by now. But you don’t let other peoples to protect their environment etc. by law, you buy politicians, officials, NGOs to take all what you call “barriers” “government intervention” “populism” down.

        Stop hypocrisy!

  2. Sorry, I’m 100% certain Bono doesn’t know what Bono’s talking about.

    He has no idea what actual capitalism is, only the watered-down criminally-indebted socialist European version.

      • Hey, there’s Toad! Where you been, Toad? Off at your Obama reeducation camp again?

        How’d that go?

        Actually, we really couldn’t care less, but congratulations on your crap response.

        Rule 1: The Economist is not about economics.

        Rule 2: Do not cite The Economist in economic discussions.

        To wit: Spain’s commonly cited debt/GDP ratio of 77.3 (from The Economist) is actually significantly understated, to the tune of almost half. If you count Spanish debt, and liabilities to the ECB and similar, the number you get is around $1.733 trillion, or about 133.8% debt/GDP (these figures are back when the official debt/GDP number was 68.5%)

        http://www.zerohedge.com/news/fighting-spanish-windmills-or-how-spains-debtgdp-ratio-double-what-reported

        So Europe is in much worse shape than you (or The “Economist”) knows or cares to admit.

        The US is in terrible shape, too, from emulating Europe.

        FAIL

        • Spent five weeks in Europe, where at least they know the difference between per capita debt and debt as a percentage of gdp. What you meant to write, if you weren’t a dimbulb, is that per capita debt is only half the story, the other being ability to repay and the proximate problem in Spain and Greece.

          Then I introduce the concept of WILLINGNESS to pay. Ronnie inherited a debt equal in 2012 dollars to $8,800/head from Carter. It was $15,300 when Bush I took over, an $18,500 ante for Clinton, $20,000 for Bush II. Dubya ran it up to $35,000. Under Obama, it’s about $38,000 now. http://www.skymachines.com/US-National-Debt-Per-Capita-Percent-of-GDP-and-by-Presidental-Term.htm See a pattern here? Like supply side is a bad joke?

          • What parts of Europe did you visit? The riot-free zones in Greece (youth unemployment rate: 65%)? Madrid’s ghost cities (youth unemployment rate: 57%)?

            When your original point fails, switch measures and tactics. Well played.

            Using what we call “math,” you can see from my previous post that your aggregate debt measure (as reflected by Eurostat) is wrong. Since that figure is faulty, the subsequent “per capita” measure is also wrong, to the low side.

            “…per capita debt is only half the story, the other being ability to repay and the proximate problem in Spain and Greece.”
            And Italy, Ireland, Portugal, France, and by proxy, Germany (Germany cannot facilitate debt assumption of all other Eurozone countries, which it is currently doing). Britain is in serious jeopardy as well, and has been for some time, but is not part of the EMU, which allowed them to retain sovereign monetary policy.

            Of course, it’s all Reagan’s/Bush’s fault.

            God you’re an idiot. Glad to see the Toad Manson moronic universal constant still holds.

          • Sweden, Norway,Denmark, France, UK up to the Outer Hebrides. Most depressing sight: 40 or 50 JD wannabes in Stratford Upon Avon on a late night street corner with a pair of bobbies nearby tapping their batons into their palms.

            Best new business concept: the no staff hotel as emerging in Sweden. You book and pay by email. You get a pass code for the front door and your room. The major savings is real estate because there is no need for visibility or for economies of scale. With a dayroom and kitchen, the experience is more guest house than hotel. Of course, it helps to have Sweden’s civil society eh?

          • The Volvo part, or the Swedish porn part?

            Drop that “civilized society” into Detroit and see what happens.

            Glad you got to see how bad it is over there.

            I have instructed my in-laws n Ireland to get their money out of all banks there, because it isn’t safe.

            It is only marginally safer here. Different thread.

          • You mean once government crushes that (more), then the riots begin.

            Government is mostly Dumbasscrats. Has been for 50 years.

          • Yeah, right. 33 years and counting but trickle down is going to kick in any minute now…. No one is buying, Mesa, especially not the young. http://www.breitbart.com/Big-Government/2013/06/03/Not-Cool-CRNC-to-Release-Report-Slamming-GOP-for-Turning-Off-Young-Voters

            (CRNC is college Republican National Committee.) Results: Rs screwed up the economy. Cutting taxes doesn’t create jobs. Rich should pay more.

            How does it feel being on the wrong side of history?

          • LMAO. So now you’re quoting college Repugs.

            Good link to a marketing piece. It confirms the dismal state of higher education, and state-run elementary education.

            All of the major pieces of social legislation from the last century are Dumbasscrat-generated. Some Repugs signed on, but the big 3 – Socialist Insecurity, Mediscare and Medicaid – are all brainchildren of the left.

            Those 3 programs now threaten the future of this country, along with Obamascare, which was entirely Dumbasscrat in origin, and that is currently in process of destroying the economy.

            Supply-side trickle down whatever has nothing to do with anything, Toad. The economy is imploding under the weight of hyperregulation, massive bloated government bureaucracy, and expected future taxes, all generated primarily by the left. Of course, Repugs are doing nothing to help the situation, and largely did nothing prior to Obamascare, so they are at least partially responsible.

            Keep playing the popularity angle, Toad – that’ll save you from the carnage. Sure.

          • Let’s clarify the situation further, Toad.

            The engine that drove the prosperity documented (somewhat) above is now broken – it doesn’t work. It’s dead. Government intervention and expansion, coupled with bloated unaccountable public sector parasites and massive entitlement and pension obligations, has killed it. This is true throughout the developed economies of the West.

            Without that growth, you don’t get the economic advancement that Mr. Bono Vox (Paul Hewson) desires.

            You can only pile so much dead weight on the private sector before it dies, or becomes subservient to (or an extension of) the public sector. We’re past that point, and the giant obligations are coming due. Those obligations will never be paid.

            That is how bad the current situation is. That is the natural outcome of the entitlement state.

    • If you look at how U2′s business is run and Bono’s involvement in Elevation Ventures, you’ll be both convinced and impressed that he knows how capitalism works.

      • I have, and they have done some interesting things, though I doubt Bono is their chief financial advisor/corporate advisory committee.

        They certainly have done much better than most of Ireland, which is a mess.

    • “. . . only the watered-down criminally-indebted socialist European version.”

      Which is still better than a centrally-planned Soviet-style economy or a “what’s yours is mine because I can grab it from you” kleptocracy which much of Africa has.

      Insisting on perfection is fatuous.

      • No, what is fatuous is ascribing understanding and comprehension of complex dynamic systems like economies to pop stars.

        I certainly hope Mr. Vox is sincere in his commentary, but I fear that he lacks foundational economic knowledge to know that he is correct, and why he is correct, and that most governments worldwide right now are taking actions which are dangerous and detrimental to millions, not just Africa, and contrary to his sentiment.

        Europe is the most prominent example of this. The US is second.

        Let us hope Bono doesn’t turn out to be another Bob Geldof.

  3. With Little Notice, Globalization Reduced Poverty (Yale Global)
    http://yaleglobal.yale.edu/content/little-notice-globalization-reduced-poverty

    “We are in the midst of the fastest period of poverty reduction the world has ever seen. The global poverty rate, which stood at 25 percent in 2005, is ticking downwards at one to two percentage points a year, lifting around 70 million people – the population of Turkey or Thailand – out of destitution annually. Advances in human progress on such a scale are unprecedented, yet remain almost universally unacknowledged. [...]

    Behind these aggregate figures lies a somber reality. In assessing the fortunes of the developing world during the late 20th century, countries can be roughly divided into two categories: China and the rest.China’s stunning economic reversal – 30 years ago, only 16 percent of its population lived above the poverty line, but by 2005, only 16 percent stood below it – masks others’ failings. Excluding China, the 500 million decrease in global poverty becomes an increase of 100 million. In the world’s poorest region, sub-Saharan Africa, the poverty rate remained above 50 percent throughout the period, which, given the region’s rapid population growth, translated into a near doubling in the number of its poor. Similarly in South Asia, Latin America and Europe–Central Asia there were more poor people in 2005 than there were a quarter of a century earlier. [...]

    This depressing track record shapes perspectives on poverty that abound today. Global poverty has come to be seen as a constant, with the poor cut off from the prosperity enjoyed elsewhere. Only a radical change to the current global order – an alternative system to globalization or a massive exercise in redistribution – could possibly alter this destiny.

    In a new study of global poverty, we upend this narrative. By combining the most recent country survey data of household consumption with the latest figures on private consumption growth, we generated global poverty estimates from 2005 up to the present day. Poverty reduction accelerated in the early 2000s at a rate that has been sustained throughout the decade, even during the dark recesses of the financial crisis. Today, we estimate that there are approximately 820 million people living on less than $1.25 a day. This means that the prime target of the Millennium Development Goals – to halve the rate of global poverty by 2015 from its 1990 level – was probably achieved around three years ago. Whereas it took 25 years to reduce poverty by half a billion people up to 2005, the same feat was likely achieved in the six years between then and now. Never before have so many people been lifted out of poverty over such a brief period of time. [...]

    This stunning progress is driven by rapid economic growth across the developing world. During the 1980s and 1990s, per capita growth in developing countries averaged just 1 to 2 percent a year, not nearly fast enough to make a serious dent in poverty levels. Since around 2003, however, growth in the developing world has taken off, averaging 5 percent per capita a year. [...]

    These factors are manifestations of a set of broader trends – the rise of globalization, the spread of capitalism and the improving quality of economic governance – which together have enabled the developing world to begin converging on advanced economy incomes after centuries of divergence. The poor countries that display the greatest success today are those that are engaging with the global economy, allowing market prices to balance supply and demand and to allocate scarce resources, and pursuing sensible and strategic economic policies to spur investment, trade and job creation. It’s this potent combination that sets the current period apart from a history of insipid growth and intractable poverty.”

    Okay, trolls. Carry on your lives in abject ignorance, and leave the rest of us alone.

    • Kyle, agree with much of your post. Read the Yale article and admittedly not sure I know the author’s definition of globalization. It appears to just mean trade with other countries. It appears the Yalie’s want to give credit to globalization, whatever that is, versus free markets, capitalism, reasonable rule of law protecting private property, etc. In other words if you don’t have these things, you have nothing to trade. What am I missing?

  4. I think Bono has grown as a person. He really wants to help the poor of Africa, and can see what it is that will help them.

    Unlike most other celebrity benefit concert types whose only idea is self-aggrandizement.

    • In the end, Bono is a practical man, and not terribly political. Sure, he’s got an ego. But I don’t doubt that he wants to do good, and when your desire to do right by people and alleviate poverty is authentic (rather than driven by ideology), it’s hard to beat capitalism. Not the caricature of capitalism that lives in the minds of nutty leftists, but real, honest-to-goodness capitalism. It doesn’t just put people to work, it gives them the opportunity to take ideas from their own minds and run with them. To build. To own. To pass on.

      • Was Nazi’s idea to destroy jews a good idea?

        The US is not depleted because it depletes other peoples resources.

        What people really need? I’ll tell you what they do not need. They don’t need to finance, support and maintain your excessive life style.

        The earth hasn’t warmed for the last 16 years! Bravo! I guess it hasn’t reached your buttock so far. Then just have a look around to see the air pollution, the oil leakages on seas, the pollutions of rivers, the mistreatment of breeding animals etc.

        Capitalism capitalism, you are all talking about capitalism. You’re capitalist for yourself. You don’t let other peoples to enjoy the benefits of liberalism, open markets, fair competition. You just open up markets. You are just looking for new horizons to channel the money that you do not know what to do with. Out of the fear of other mad capital owners you put yourself and the earth with its peoples in jeopardy. You are the slave of your self made machinery!

        • Sell your computer, get off the grid and live on twigs and berries if you want. Leave me alone. Use your missionary zeal to reform your own life. Leave me alone.

        • Capitalism is the absolutely worst idea for governance and financial systems that we’ve ever come up with… except for all the others.

          The problem is not that capitalism is so wonderful (it isn’t), but that all the alternatives that have ever been tried have been SO MUCH WORSE.

          Pollution of all kinds in the US is at the lowest level in living memory. Number of trees is at the highest. Most of this was done before and/or in spite of government action (especially the pollution bits – the famous Chihuaga Fire was famous because river fires had become so RARE, and the Clean Water Act was passed after that).

          Capitalism is the basic idea that people will pay more for what they want. People don’t want to live in pollution, so capitalism will largely solve that problem, if the government will just get out of the way. It will generally solve almost every problem less poorly than other systems we’ve tried.

          • FTR, Bono got his views on China, Africa, and aid from Dambisa Moyo. Just a couple of years ago he saw aid as the solution. She set him straight – diplomatically but firmly:
            http://www.youtube.com/watch?v=t2i2hx3LTwU (c.a. 4’20″)

            To Bono’s credit, he didn’t take umbrage but learned from the experience; and he has transformed himself into someone who might be able to use his celebrity to make a real difference.

  5. That chart, however, while interesting and all, is quite misleading.

    Yes, there are pretty good records on the books for UK and US GDP.
    No, there are no “good” records on the books for Chinese GDP. It is all done by “extrapolation” and “analysis” of what little data they do have. It is in fact all guesswork.

    Which is fine for plotting a general trend for China – but completely misleading to compare a guesswork plot to the actual hard numbers for the US and UK.

    Keep in mind that three different researchers will plot three different lines for China, but they will all plot the same lines for the US and UK.

  6. Ya gotta hand it to the twenty-somethings. They’ve fully absorbed the anti-capitalist bull taught to them. Too bad they never saw their socialist loving professor pull out of the faculty parking lot in their Mercedes, and drive up to their $600k house while talking on their iPhone.

  7. The chart shows Chinese GDP per capita flatlining until the period of wars from 1930-1949, and then taking off like a firework from……the date of the communist takeover. The firework’s trajectory does, to be sure, get a little steeper from 1980, which is when they swapped Mao for Deng, but you have to look closely to see that. So the chart seems to show that communism and capitalism both work better than endless civil war. In reality of course Pethokoukis is right – the Chinese have done much better since they got rid of Mao. But the chart doesn’t illustrate his point, and he should put it away. As Robert Blair says, historical Chinese GDP figures are total crap. (Even current ones are pretty crap.)

    • So I guess the starvation of millions of chinese villagers and the various great leap forwards (every village needed to smelt their own iron) were the source of china’s wealth creation.

  8. In other words, some of the most doctrinaire Communist and Socialist states are doing what the current Administration wants the US to stop doing – on the basis it will make things better instead of as bad as they have been in Red China and India.

    Tell me again how smart the Lefties in this country are.

  9. Was Nazi’s idea to destroy jews a good one?

    The US is not depleted because it depletes other peoples resources.

    What people really need? I’ll tell you what they do not need. They don’t need to finance, support and maintain your excessive life style.

    The earth hasn’t warmed for the last 16 years! Bravo! I guess it hasn’t reached your buttock so far. Then just have a look around to see the air pollution, the oil leakages on seas, the pollutions of rivers, the mistreatment of breeding animals etc.

    Capitalism capitalism, you are all talking about capitalism. You’re capitalist for yourself. You don’t let other peoples to enjoy the benefits of liberalism, open markets, fair competition. You just open up markets. You are just looking for new horizons to channel the money that you do not know what to do with. Out of the fear of other mad capital owners you put yourself and the earth with its peoples in jeopardy. You are the slave of your self made machinery!

  10. You just lost the left here. You are using facts, numbers and graphs to show how capitalism works so well for the poor.

    This is the stuff that just confuses them, so stop it.

  11. FTR, Bono got his views on China, Africa, and aid from Dambisa Moyo. Just a couple of years ago he saw aid as the solution. She set him straight – diplomatically but firmly:
    http://www.youtube.com/watch?v=t2i2hx3LTwU (c.a. 4’20″)

    To Bono’s credit, he didn’t take umbrage but learned from the experience; and he has transformed himself into someone who might be able to use his celebrity to make a real difference.

    • This is the difference between Bobo the liberal and Bono the lefty.

      Bono the liberal is teachable. He apparently opened his eyes and looked around and then had to say (WTTE) “I can’t believe I’m saying this … but …”

      He could see reality did not match up with his previous narrative. And he altered the narrative to fit and communicate the facts.

      Ooops. In a good way.

      • If we can turn a few more liberal giveaway robots around, maybe it’s not too late to stop China from eating our lunch in Africa.

        ;-)

  12. Look, you all are talking about the soviet union and its satellites all the time, a regime which was collapsed due to other reasons than you suppose…

    I say, free entrepreneurship is not bad. But you should let others to benefit from it. Through double standards you “capitalists” are suffocating the others, less lucky parts of the world. Don’t compare yourself with the soviet union etc. to show off yourself as innocent and as the better choice for humanity. You are no representative of even what Smith was talking about! You are rotten and your money cannot wash you out! Your system stinks!

    By the way, some of you say that US has a very clean environment because of capitalism. Hohoho! I have no idea about it, it can be clean, but not because of your rotten system, but because of legal protection, if there wasn’t any “your” environment would have been destroyed by now. But you don’t let other peoples to protect their environment etc. by law, you buy politicians, officials, NGOs to take all what you call “barriers” “government intervention” “populism” down.

    Stop hypocrisy!

  13. Thanks Nocturnaux for your brave comments,we need a much fairer word,much more equal world and this American model or any other current model of Capitalism wont bring that! In fact its not about Capitalism vs. Any other system,its about justice,which is not happening right now!
    Only doing justice to the Environment will bring more justice in the world!Good luck!

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