late and eminent economist for the OECD, produced a famous chart in 1995, depicted nearby. For the longest time—basically from after the Garden of Eden until the 19th century—economic benefit for the average person in the West or Japan was flat as toast. The Mona Lisa aside, there was a reason someone back then said life was nasty, brutish and short. Then suddenly, new wealth spread broadly. Maddison describes 1820 till 1950 as the capitalist epoch. He means that admiringly. The tools of capitalism unlocked the knowledge created until then. What came to be called economic growth gave more people jobs that lifted them and their families from the muck of joblessness and poverty. Maddison also noted that much of the world did not participate in the capitalist epoch. No wonder they revolt now. This history is worth restating because the importance of strong economic growth, and the unavoidable necessity of a U.S. that leads that growth, may be disappearing down the memory hole of public policy, on the left and even among some on the right. Both share the grim view that the U.S. economy is flatlining, and the grim fight is over how to divide whats left. There is no alternative to strong economic growth. None. They know this in Beijing, Seoul, Kuala Lumpur, Jakarta, Warsaw, Bratislava, Taipei, even Hanoi. The missing piece is a global growth agenda led by a U.S. president and Treasury secretary who arent fundamentally at odds with capitalism. The revival of tax reform announced this week (and on these pages) by House Ways and Means Chairman Dave Camp is a start. In a puckish moment, Angus Maddison did say that income inequality was rather minimal in the 11th century. Now those were the days.
Posted on: Thu, 27 Feb 2014 22:02:49 +0000