Is there anyone other than me who suspects that this whole Gleneagles/Live8/Make Poverty History fuss will fizzle out and turn out to have been nothing but an occasion for politicians and rockstars to make some noise?
It's difficult to accumulate wealth at home when all the wealth generated has to go towards paying debts In my view this is a fallacy born from the confusion between public and private wealth. Through most of the twentieth century, the Italian state was in debt - often massive debt that would cripple an African country. It was continuously supported not only by taxation, but by millions of Italian families buying State bonds. That is because the families were able to buy them, having savings - and State bonds were just about the safest investment there was. Economists at the time decried this diversion of Italian private wealth into supporting government debt rather than investment, but it is not as easy as that. First, bonds were redeemed at the end of their cycle, and paid generous interest, so the capital sooner or later became available again. Second, the bonds themselves were treated like money, passed along as payment for private deals (I saw it done myself) and therefore their value, even when in the State's pockets, was still available to bondholders. Meanshile, and in spite of State poverty and of two disastrous wars, the country as such grew steadily richer. That is because Italian families, individually, did their best to provide for themselves; and that, in turn, depended on an ample and pre-existent pool of professional skills in the society. All of this has very little to do with the State being in debt or not, except to the extent that State services are provided; and a society with a great deal of private wealth available can to a large extent cover up for insufficient State provision - get private health cover, or even private schooling for their children. It is when private wealth is insufficient that State provision becomes critical.
when every day is a desperate struggle to survive This, I regret to say, is journalistic jargon - froth and wind meaning nothing. When I say that the African economy entered the twentieth century in an Iron Age sort of condition, I do not say that it was a desperate condition. To the contrary, it suited local needs perfectly well. Even in the face of the intrusion of a far more complex economy using skills that African farmers had never heard of, the iron-age farming economy still serves the needs of many Africans well enough. The notion of a "desperate" continent "struggling to survive" erery day of the week is pure nonsense; Africa is not one long slum of beggars not knowing where their next meal will come from. All the famous episodes of famine and starvation have been caused by wars. The point is not that the iron-age farming mindset is inadequate to its time and country, but that it is inadequate to cope with a silicon-age society.
In my view this is a fallacy born from the confusion between public and private wealth.
It's only a fallacy if one excludes private wealth from 'all the wealth', or if you believe that 'trickle-down' effects will result in sufficient development of skills and infrastructure.
The relationship between public and private wealth (and debt) is interesting (but I'm way too tired at the moment to open that huge can of worms).
bonds were redeemed at the end of their cycle, and paid generous interest
Where did the interest come from? Was the State generating wealth to pay it, or was it collecting more in taxes due to economic growth fuelled by private investment? Or...?
It is when private wealth is insufficient that State provision becomes critical.
Of course, but people in extreme poverty have insufficient wealth by definition, so state provision (or some other means of redistributing wealth internally) is critical for them.
This, I regret to say,
You do? ;)
When I say that the African economy entered the twentieth century in an Iron Age sort of condition, I do not say that it was a desperate condition.
And neither do - or did - I, but whatever the cause(s), both the numbers and proportion of Africans living in extreme poverty (i.e. unable to meet basic needs) rose between 1981 and 2001. That's a lot of people who aren't able to accumulate wealth and whose physical and living conditions are not optimal for aquiring skills.
Yes, I do. I do not like to take up anyone on their style or content where important matters are being discussed. Especially not an ordinarily brilliant writer.
The Italian state paid bonds out of tax income. In the seventies especially this was artificially backed by inflation, but the bonds had to always pay above inflation for savers to buy them, therefore there was always a call on the public income.
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Date: 2005-07-02 05:22 am (UTC)In my view this is a fallacy born from the confusion between public and private wealth. Through most of the twentieth century, the Italian state was in debt - often massive debt that would cripple an African country. It was continuously supported not only by taxation, but by millions of Italian families buying State bonds. That is because the families were able to buy them, having savings - and State bonds were just about the safest investment there was. Economists at the time decried this diversion of Italian private wealth into supporting government debt rather than investment, but it is not as easy as that. First, bonds were redeemed at the end of their cycle, and paid generous interest, so the capital sooner or later became available again. Second, the bonds themselves were treated like money, passed along as payment for private deals (I saw it done myself) and therefore their value, even when in the State's pockets, was still available to bondholders. Meanshile, and in spite of State poverty and of two disastrous wars, the country as such grew steadily richer. That is because Italian families, individually, did their best to provide for themselves; and that, in turn, depended on an ample and pre-existent pool of professional skills in the society. All of this has very little to do with the State being in debt or not, except to the extent that State services are provided; and a society with a great deal of private wealth available can to a large extent cover up for insufficient State provision - get private health cover, or even private schooling for their children. It is when private wealth is insufficient that State provision becomes critical.
when every day is a desperate struggle to survive
This, I regret to say, is journalistic jargon - froth and wind meaning nothing. When I say that the African economy entered the twentieth century in an Iron Age sort of condition, I do not say that it was a desperate condition. To the contrary, it suited local needs perfectly well. Even in the face of the intrusion of a far more complex economy using skills that African farmers had never heard of, the iron-age farming economy still serves the needs of many Africans well enough. The notion of a "desperate" continent "struggling to survive" erery day of the week is pure nonsense; Africa is not one long slum of beggars not knowing where their next meal will come from. All the famous episodes of famine and starvation have been caused by wars. The point is not that the iron-age farming mindset is inadequate to its time and country, but that it is inadequate to cope with a silicon-age society.
no subject
Date: 2005-07-03 12:32 am (UTC)It's only a fallacy if one excludes private wealth from 'all the wealth', or if you believe that 'trickle-down' effects will result in sufficient development of skills and infrastructure.
The relationship between public and private wealth (and debt) is interesting (but I'm way too tired at the moment to open that huge can of worms).
bonds were redeemed at the end of their cycle, and paid generous interest
Where did the interest come from? Was the State generating wealth to pay it, or was it collecting more in taxes due to economic growth fuelled by private investment? Or...?
It is when private wealth is insufficient that State provision becomes critical.
Of course, but people in extreme poverty have insufficient wealth by definition, so state provision (or some other means of redistributing wealth internally) is critical for them.
This, I regret to say,
You do? ;)
When I say that the African economy entered the twentieth century in an Iron Age sort of condition, I do not say that it was a desperate condition.
And neither do - or did - I, but whatever the cause(s), both the numbers and proportion of Africans living in extreme poverty (i.e. unable to meet basic needs) rose between 1981 and 2001. That's a lot of people who aren't able to accumulate wealth and whose physical and living conditions are not optimal for aquiring skills.
no subject
Date: 2005-07-04 06:00 pm (UTC)Yes, I do. I do not like to take up anyone on their style or content where important matters are being discussed. Especially not an ordinarily brilliant writer.
The Italian state paid bonds out of tax income. In the seventies especially this was artificially backed by inflation, but the bonds had to always pay above inflation for savers to buy them, therefore there was always a call on the public income.