Friday, August 16, 2013


Vaya, vaya, vaya. El Kid tri-bíblico (in remembrance of that shameful episode in GDL) y su séquito pretenden entrar "pisando juerte" en la batalla ideológica con un: "History will teach us nothing". No compadritos, su fortaleza no radica ahí, tened un poco de 'dignidak' y no hagan de nuex el numerito, por favor. Dejad que los vivos resuciten a sus vivos.

America (sic) enters the fray

... "Hamilton provided the blueprint for US economic policy until the end of the Second World War. His infant industry programme created the condition for a rapid industrial development. He also set up the government bond market and promoted the development of the banking system (once again, against opposition from Thomas Jefferson and his followers). It is no hyperbole from the New York Historical Society to have called him 'The Man Who Made Modern America' in a recent exhibition. Had the US rejected Hamilton's vision and accepted that of his archrival, Thomas Jefferson, for whom the ideal society was an agrarian economy made up of self-governing yeoman farmers (although the slave-owner had to sweep the slave who supported this lifestyle under the carpet), it would never have been able to propel itself from being a minor agrarian power rebelling against its powerful colonial master to the world's greatest super-power.

Abraham Lincoln and America's bid for supremacy

... "...Historians of the period agree that his abolition of slavery in 1862 was more a strategic move to win the war than an act of moral conviction. Disagreement over trade policy, in fact, was at least as important as, and possibly more important than, slavery in bringing about the Civil War. ...

"...once elected, Lincoln raised industrial tariffs to their highest level so far in US history. The expenditure for the Civil War was given as an excuse - in the same way in which the first significant rise in US tariffs came about during the Anglo-American (1821-1816). However, after the war, tariffs stayed at the wartime levels or above. Tariffs on manufactured imports remained at 40-50% until the First World War, and were the highest of any country of the world.

... "Despite being the most protectionist country in the world throughout the 19th century and right up to the 1920s, the US was also the fastest growing economy.

... "It was only after the Second World War that the US with its industrial supremacy now unchallenged - liberalized its trade and started championing the cause of free trade... It has also been much more aggressive in using non-tariff protectionist measures when necessary. Moreover, even when it shifted to freer (if not absolutely free) trade, the US government promoted key industries by another means, namely, public funding of R&D.

Other countries, guilty secrets

... "...the two champions of free trade, Britain and the US, were not only not free trade economics, but had been the two protectionist economies among rich countries - that is, until they each became the world's dominant industrial power.

... "In the early days of their industrialization, when there were not enough private sector entrepreneurs who could take on risky, large-scale ventures, most of today's rich country governments (except the US and the British) set up state-owned enterprises. In some case, they provided so many subsidies and other help (e.g. poaching skilled workers from abroad) to some private-sector enterprises that they were effectively public-private joint ventures.

... "After the Second World War, state efforts to promote industry were intensified in most rich countries. The biggest shift was in France.

... "... After 1945, acknowledging that its conservative, hands-off policies were responsible for its relative economic decline and thus defeats in two world wars, the French state took a much more active role in the economy. It launched 'indicative' (as opposed to communism's 'compulsory') planning, took over key industries trough nationalization, and channeled investment into strategic industries through state-owned banks. To create the breathing space for new industries to grow, industrial tariffs were maintained at a relatively high level until the 1960s. The strategy worked very well. By the 1980s, France had transformed itself into a technological leader in many areas.

... "Thus practically all of today's rich countries used nationalistic policies (e.g., tariffs, subsidies, restrictions, on foreign investment) to promote their infant industries, through the exact mix of policies used, as well as their timing and duration, differed across the countries.

Learning the right lessons from history

"The Roman politician and philosopher Cicero once said: 'Not to know what has been transacted in former times is to be always a child. If no use is made of the labours of past ages, the world must remain always in the infancy of knowledge'.

... "... history tell us that, in the early stage of their development, virtually all successful countries used some mixture of protection, subsidies and regulation in order to develop their economies.

"Unfortunately, another lesson of history is that rich countries have 'kicked away the ladder' by forcing free-market, free-trade policies on poor countries. Already established countries do not want more competitor emerging through the nationalistic policies they themselves successfully used in the past.

"Fortunately, history also shows that it is not inevitable that successful countries act as Bad Samaritans and, more importantly, that it is in their enlightened self-interest not to act as one. The most recent and important episode of this kind occurred between the launch of the Marshall Plan in 1947 and the rise of neo-liberalism in the 1980s.

... "The result of this enlightened strategy was spectacular. The rich countries experienced the so-called 'Golden Age of Capitalism'(1950-1973). 'Per capita' income growth rate shot up from 1.3% in the liberal golden age (1870-1913) to 4.1% in Europe. It rose from 1.8% to 2.5% in the US, while it skyrocketed from 1.5% to 8.1% in Japan. These spectacular growth performances were combined with low inequality and economic stability. More importantly, developing countries also performed very well during this period..., during the 1960s and the 1970s, when they used nationalistic policies under the 'permissive'international system, they grew at 3% in 'per capita' terms. This is the way above what they had achieved under old liberal policies during the 'first globalization' (1870-1913) and twice the rate they have recorded since the 1980s under neo-liberal policies."

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