The divided country examples of west Germany versus east Germany, south Korea versus North Korea, south Vietnam (an especially poorly governed country, but still) versus north Vietnam, and Taiwan (or Hong Kong) versus mainland China all suggest that free market economies in general do better for all their people than centrally planned economies. The recent economic growth in China resulted from basically relaxing central planning in several keys areas of the economy on the examples of Hong Kong and Taiwan.
hong kong vs. pre-market reform china,
south korea vs. north korea,
18th century US vs. 18th century mexico,
cayman islands vs. cuba,
singapore vs. jakarta
there are many examples of the more free market society doing better than its counterparts.
I can't agree with this at all. We have plenty of modern examples that show this to not be the case: West Germany versus East Germany, South Korea versus North Korea, Taiwan versus China. In all these examples less oppressions results in a stronger economy and a higher standard of living for citizens.
Lots of Asian countries have a high standard of living too.
One of the biggest differences is functioning institutions. As bad as some first world governments can seem from our perspective, they’re way better than the kleptocrats and warlords who rule some parts of the world. And yeah, when you have functioning institutions, you do end up with smarter and more productive populations because children can go to school instead of slaving away in the cobalt mines.
OK I think I managed to find a good example for this: South Korea and Spain have comparable GDP's and population sizes (about 1.5T/60 million to 1.3T/56 million), yet South Korea is WAAAY more advanced technologically than Spain.
It's less free than the US, but it's a lot more free than what it was before 1978. China's prosperity improved in direct correlation with adopting free market policies.
For another example, look at North vs South Korea. Same country, an arbitrary line drawn, one prospers the other doesn't. East and West Germany, same thing. North and South US before the Civil War, same thing.
I'm not convinced that South Korea is the best example - much of its economic growth(until 1987) occurred under what Wikipedia describes as dictatorial then despotic rule and I'd be tempted to attribute some of the difference to having the US as an ally instead of the collapsing Soviet Union.
An equal, by some metrics greater, growth in living standards occurred in Japan, Taiwan, South Korea, Vietnam. The great success of the CCP was getting out of the Chinese people’s way.
Obviously older, but Japan and South Korea have probably improved even more if we look since the end of WW2. I hadn't known until recently that South and North Korea were both similarly poor at the end of the Korean War.
Like I said elsewhere, Japan, South Korea, and Taiwan have a similar culture and shared history yet became liberal democracies. They are also much more prosperous.
An important factor that often gets left out when discussing different types of government is the level of development of a country. A centrally powerful government has some perks that makes rapid industrialization possible. Where as a democracy might be good if a country is wealthy and its citizens educated. South Korea and Singapore are the only countries that went from impoverished to developed, and both were under authoritarian government when the rapid industrialization happened. You can also look at China and India, both started at comparable levels of development in the 70s but now one economy is 5 times the other
There seems to be a lot more cronyism in governments that don't do a lot of useful things. I'm sure there's favoritism in South Korea but at the same time their industrial policy is first rate.
Oh, I meant they are similar in terms of limited natural resources and they both have to rely on intellectual capital on their citizens and exports for growth.
Korea is mostly homogeneous society and not very open to immigrants, and thus their growth is limited. So is Japan, and their growth also hit the wall as well.
Fortunately during the past 40 years different countries engaged in different degrees of liberalization, so it is in fact possible to compare them to some degree. Some of these countries even had very similar cultures and economic starting points.
For example, Hong Kong and Singapore were extremely economically liberal. They still are, to some extent (some of the lowest tax rates in the world; Singapore even has no capital gains tax, and its top tax rate is 20%). According to Google, Singapore has a per capita GDP of $52,960.71 (the US is $57,466.79), a rich country by international standards. Hong Kong has a GDP per capita of $43,681.14.
Taiwan and Korea were/are less economically liberal than Hong Kong and Singapore, but still have relatively low tax rates by international standards. Korea has a GDP per capita of $27,538.81, and Taiwan of $31,900.00.
China was slow to open up economically, waiting until the 1970s, and even since then its policies are less liberal than the aforementioned countries (see e.g. https://en.wikipedia.org/wiki/Ease_of_doing_business_index). China now has a GDP per capita of $8,123.18.
North Korea is even less liberal than China, almost completely rejecting international trade. It has a GDP per capita of $583.00.
While this is not a large sample size, it's better than nothing, and does seem to indicate a correlation between economic liberalisation and economic growth.
Yes, but South Korea is leading the pack. Something unusual since they only industrialized in the 1970s and were poorer than North Korea until the 1980s.
reply