Sunday, September 26, 2010

Rethinking the Naughtiness of the Aughties

I thought this was an underappreciated true comment from President Lula of Brazil, of the Petrobras IPO:
"[But] now that very same 'capitalist-eater' [i.e. me, former socialist Lula]… [is] taking part in this most positive moment for world capitalism. Never before in the history of man have we had a capitalisation of this size," the president boasted.

There’s been quite a few suggestions that the previous decade was an absolute, unmitigated disaster, and if you want to be provincial and focus solely on the U.S. and other developed country, that’s probably nearer to the truth than not. But if you look at the decade from the perspective of the BIC countries (I refuse to group “Russia” with Brazil, India and China in the BRIC designation. Quick comparison as to why. Per capita income: Russia, $14,000; China, $7,000; India, $2,900; Brazil, $10, 500. One of these countries is not like the other ones.), the decade looks awe-inspiringly good. Brazil:
In Brazil hardly a day goes by without further proof of the country's rise: record fuel sales, record government spending, record levels of consumption and income. The finance ministry expects gross domestic product (GDP) to rise by 6.5% this year and average 5.7% over the coming years. Last week unemployment levels hit a record low of about 6.7%, according to the Brazilian Institute of Geography and Statistics, while the government says an estimated 25 million Brazilians have moved into the middle class since 2002 and that the proportion of people living in extreme poverty fell from 12% to about 4% between 2003 and 2008.

If I recall correctly, extreme poverty is typically defined as a dollar a day, meaning that roughly 13 million Brazilians went from making a dollar a day at the beginning of the decade to making, well, more.

The past thirty years have seen roughly five hundred million Chinese move out of poverty, with other amazing gains being made in other important statistics.

So you can see why countries like Brazil and China would be a mite more excited about the decade and global capitalism than we are.

The problem is that while the particular arrangement promoted by our economic system has promoted such spectacular results for so many people in past ten years or so is unsustainable for a number of reasons, many of which you probably appreciate already: unsustainable as a matter of pure economics in dollars and cents, unsustainable from the environment that is a necessary fundament of our economy, and probably unsustainable for China in particular (I haven’t studied Brazil enough to comment; it seems to me their biggest problem is educational, a problem which doesn’t seem to be related to the iron logic of the economic system as, for example, China’s too-high savings rate is.) So we’ll have to change, but then again we always have to change.

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