Can every nation be rich?

Question

I'm intrigued when people say that the world economy is not a zero sum game, and that jobs going overseas do not hurt us and are in fact a matter of us exploiting the people we give our jobs to. So far, the ones that have said that here have offered nothing to back it up but optimism (driven by a sappy liberalism) and fear of the alternative and magical thinking, i.e. wish fulfillment (my, my, it's unthinkable the first world might collapse so I will say it cannot). If it is not a zero sum game, and everyone can be rich, I would really like to know the economic basis for that claim. You don't have to have an advanced economics degree as I do to answer this question, but I'd like to see more than "I imagine people in poorer nations work harder and would give us all better productivity," or "the people who run the world wouldn't let first world economies collapse" (actual answers from other questions).

Wow, sorry Mr. Grad Degree, that's wrong. You cannot compare the last 1,000 years with the next 1,000 years. Maybe you should have skipped your intuition and done the math after all. The resources we gobbled up are what fed the boom and our resources are finite and going fast.

To further clarify for those at the bottom of the class, in order for labor to create wealth within a county there have to be jobs, and in order to produce technology, there have to be raw materials.

It was a trick question in the sense that some kid with a shiny new econ degree finds himself trained on past models and short-term future (and of course, for many of today's colleges, Marxism). Without other input and experience, that student might not have a grasp of how the model changes in the long view, although if she or he really paid attention and got top grades, they might have learned about scarcity and how difficult it is to adjust to a jolting change.

Answer 1

First of all, let's not waste our time developing credibility. Things such as "You don't have to have an advanced economics degree as I do" and "I have a graduate degree in economics, and I'm about to start a PhD in finance." just really aren't necessary. I think we're all mature enough to base the validity of an answer on the logic and how well it is supported, not on whatever school the poster comes from.

With that said, I think I get what you're trying to say (after I skip through some of the unnecessary stuff). Everything we do requires resources, and the resources in the world are finite. The zero-sum you talk about is a direct result of the finite resources. If we use a pound of butter, that's a pound of butter that Zimbabwe won't be able to use.

I'd agree with that to a certain extent. However that doesn't mean that every nation can't be rich. Like someone else said, it first depends on how you define "rich". If it's an absolute value that a nation's GDP must get over (and as long as the absolute value isn't some absurdly high number) then yes I think every nation can be rich. If it's in relation to the standard of living of other countries, then it depends.

I'll assume you mean the absolute value first. As finite as the resources in the world are, there are still a lot. A whole lot. And I don't think that's the issue you should concern yourself with. Other things have the potential to kill us all before we run out of resources, such as global warming, nuclear wars, etc. Let's say we did get to that point where we used up all the resources in the world. At that point, given the GDP growth numbers we are seeing throughout the world (especially in Asia), I would think that most of the nations will be "rich". And by that time, chances are we would also learn more about how economies work, and would have been able to apply it somewhat to other countries that don't have spectacular growth numbers. Also, at this point, who is to say that we won't have the technology to go to other planets? This could potentially open up a LOT more resources. Finally, we can't forget that some of the resources of this world are regenerated. It's true that it takes a long time. However, I think it's going to be awhile before we have to even worry about running out of resources as well. Ultimately, yes, if you confine the economy to just this planet, then technically it is zero-sum. However, since there are just so many resources in this world, the fact that it is zero-sum practically means nothing. We have not come close to using up everything in the world, so it is not something we should concern ourselves with.

If you mean "rich" in a relative sense, then yes there will be poor nations. However, it doesn't always have to be this way. There will always be a bottom 20%, obviously, but their standard of living does not have to be much worse than the rich nations of the world. I think how well the rest of the world converges will depend on whether we can learn to live with people of differing religious beliefs and differing cultural values.

And yes, we are using up a lot of resources. Oil seems to be a good example of that. However, that's the great thing about markets and the pricing system. Prices will rise, choking demand for products such as oil and increasing incentives to develop alternatives. We will learn to adapt. There's still a lot of other resources in this world, and we are learning how to better produce things each day (more efficiently, meaning using less resources). I think we should be more worried about other things.

Answer 2

I have a graduate degree in economics, and I'm about to start a PhD in finance.

However, I don't need differential equations, or a journal article from Solow or Romer to show that the global economy is not a zero sum game.


I just have to point out that there is a lot more wealth in the world than there was 1,000 years ago. If it were a zero-sum game, the amount of total wealth cannot change.

Labor and technology create wealth; Marx's "labor theory of value" is only incorrect in the fact that he does not account for risk.

Answer 3

It's extremely unlikely that all countries could be _equally_ rich. But every country could be _richer_. Could any country raise its standard of living to those enjoyed in the "rich" countries today? Yes: it would take (1) a government system which allows people the freedom to enjoy what they honestly earn without fear that most of it will be confiscated by the government as taxes or stolen by other criminals and (2) a decision by the large majority of the people in the country to treat refrain from killing or stealing from each other and to become educated and hard working.

Wealth cannot be imposed from the outside.

Answer 4

Yes, in theory they can if you define "rich" to mean live comfortably. People create wealth by doing valuable work such as growing food, building shelters, performing services. The world'sGDP per capita is growing, even in poor countries. (source 1 below from the IMF) The percent of the world's population living in poverty at the same time has been declining. (source 2 below) But there are still many countries impoverishing their citizens.

In most poor countries, people are prevented from either doing valued work (because of civil wars, lack of infrastructure, oppressive laws, etc.) or from keeping the money they earned from working (high theft, high taxes, fascist government seizures of their assets, etc.). Many of the worst situations we hear about (Ethiopia, Congo, Rwanda) are a direct result of fascist government seizures of individuals' assets or civil wars.

So when all of the world's governments support people's ability to do the most valuable work they can, then all of the world's nations can live comfortably. Be "rich".

Seems like a long way off to me, but a great goal to have!

Answer 5

The economic basis is very simple: PRODUCTIVITY. The more productive everyone in the world is, the better off the world is as a whole. Moreover, as Paul Krugman once put it, "any country's standard of living depends almost entirely on its own domestic economic performance, and not on how it performs relative to other countries". Read the original, see for yourself:

http://www.pkarchive.org/trade/CompetitivenessDoesItMatter.html
http://www.pkarchive.org/trade/harvard.html

Answer 6

Look at wages around the world look at china india mexico philippines africa russia.

All under one dollar. one dollar of less.

WHY NATIONS RICH /POOR.

WHY PEOPLE RICH /POOR.

minimum wage is basic for workers. wages are basic for food.

All nations need at least 5 dollars. Five dollars to meet basis of food, clothes, education. medicine.

Answer 7

Many third world countries would be far better off with a reduced birth rate. Then, they could make better use of what resources they do have. YBIC

Answer 8

There where will the communist go to rule? I am very confident that they will never allow the world to be rich.

Else they will be poor.

Answer 9

There will always still be one bratty kid who wants someone elses toys no matter how many he already has, so to answer your question: maybe temporarily but I think it will always shift.


Good Luck & Blessings

Answer 10

hey frnd.... i think you dont know the term "relativity" .... a country can become rich only if there is some other country with is poor........it has lesser money/power....

there can be rich and poor has meanings only when compared... like i am richer than my neighbor.......... this neighbor can be richer than my third neighbor........... got my point

so now u tell how can "every nation" be rich.........? senseless!!!!

credits : Einstein