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rfmcdonaldIn the March/April 2005 issue of Foreign Policy, one Todd C. Moss reviews (review available here in PDF format) Charles Kenny's January 2005 paper in the journal World Development "Why Are We Worried About Income? Nearly Everything that Matters is Converging". Kenny's thesis is that although levels of per capita wealth have been strongly divergent worldwide, creating a yawning gap between rich and poor in the wider world, when other statistics influencing living standards--health, education, rights and infrastructure--are added there's actually a substantial amount of convergence.
This makes sense. It is true that if you go to the Penn World Table and examine relatively crude statistics like GDP per capita, you discover that Poland is as wealthy as West Germany was in the 1960s, and that even the wealthiest states of central Europe--the Czech Republic, Slovenia, Hungary, Slovakia--correspond more or less to the western Europe of the 1970s. These countries, though, have access to all sorts of really fun new technologies like broadband Internet and anti-retroviral medicines and hybrid cars and cell phones with text messaging which would have been unavailable back in the 1970s. As table 2 (PDF format) of the United Nations Development Program's 2004 report on human development suggests, there has been sustantial improvement in living standards in almost all countries, even those devastated by post-Communist economic depressions. Indonesia, in the early 21st century, is about as wealthy as France and Germany were a century earlier. Indonesians, though, not only enjoy significantly higher living standards than their European counterparts one century removed (antibiotics, for instance) but they can acquire services (telephones, for instance) which would have been prohibitively expensive a century earlier, before (say) competition and research drove telecommunication prices sharply downward. Emmanuel Todd, in his Après l'empire (reviewed by me in 2003 here) was right to note that the First World's advantages in human capital have slipped away.
This shouldn't be taken to mean that wealth doesn't matter. More and better results can be bought with a given amount of money now than a century ago, but money is still an important. If the Czech Republic's economy was as prosperous as the Austrian, Czechs would enjoy a significantly higher standard of living. It's just nice to note that wealth isn't everything.
This makes sense. It is true that if you go to the Penn World Table and examine relatively crude statistics like GDP per capita, you discover that Poland is as wealthy as West Germany was in the 1960s, and that even the wealthiest states of central Europe--the Czech Republic, Slovenia, Hungary, Slovakia--correspond more or less to the western Europe of the 1970s. These countries, though, have access to all sorts of really fun new technologies like broadband Internet and anti-retroviral medicines and hybrid cars and cell phones with text messaging which would have been unavailable back in the 1970s. As table 2 (PDF format) of the United Nations Development Program's 2004 report on human development suggests, there has been sustantial improvement in living standards in almost all countries, even those devastated by post-Communist economic depressions. Indonesia, in the early 21st century, is about as wealthy as France and Germany were a century earlier. Indonesians, though, not only enjoy significantly higher living standards than their European counterparts one century removed (antibiotics, for instance) but they can acquire services (telephones, for instance) which would have been prohibitively expensive a century earlier, before (say) competition and research drove telecommunication prices sharply downward. Emmanuel Todd, in his Après l'empire (reviewed by me in 2003 here) was right to note that the First World's advantages in human capital have slipped away.
This shouldn't be taken to mean that wealth doesn't matter. More and better results can be bought with a given amount of money now than a century ago, but money is still an important. If the Czech Republic's economy was as prosperous as the Austrian, Czechs would enjoy a significantly higher standard of living. It's just nice to note that wealth isn't everything.
