Quotation of the Day…

by Don Boudreaux on December 17, 2011

in Economics, Growth, Seen and Unseen, The Profit Motive

… is from page 209 of David Friedman’s excellent 1996 book Hidden Order; here, Friedman uses the term “economic imperialism” in its older form, namely, as a term to condemn private investment in ‘developing’ countries by firms and investors from ‘developed’ countries:

People who attack economic imperialism regard themselves as champions of the poor and oppressed.  To the extent that they succeed in preventing foreign investment in poor countries, they are benefitting the capitalists of those countries by holding up their profits and injuring the workers by holding down their wages.

(BTW, if you’re in search of a really good book to introduce someone college-age or higher to the economic way of thinking – an introduction simultaneously packed with insights yet accessible and entertaining – you can’t do better than to give him or her a copy of Hidden Order.)

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{ 27 comments }

kyle8 December 17, 2011 at 8:39 am

I remember back in the 1980′s that argument was all the rage in editorials and trashy policy books. The reason being that this was the time period when nations all around the globe were beginning to lower trade barriers and barriers to capital.

The left lost that argument and the result is the huge increase we have seen in world wide prosperity, including the lifting of over a billion people from third world misery to middle class status.

I Miss Nixon December 17, 2011 at 8:45 am

this prosperity was wrong, wrong, wrong

it was built on crony capitalisim

see below

kyle8 December 17, 2011 at 8:58 am

good grief! free markets are wrong, lifting millions out of poverty is wrong, forging better relationships between nations is wrong.

Is there no end to your lunacy?

vidyohs December 17, 2011 at 11:26 am

He is far from being alone in his lunacy. A guy named Hector said recently on a thread that “He did not know if trade had benefited the American worker”.

Pretty sad.

brotio December 20, 2011 at 12:41 am

I have opened a xanga account and will forward our hosts postings there and allow comments there

http://cafe-hayek-comments.xanga.com/

I think that you will have to create a xanga account in order to comment. If this is true, it will prevent the name-hijacking that our Leftist, idiot trolls are so fond of. I do not intend to forbid comments because of name-calling, and will not forbid Yasafi, Gil, DK, GregG, or any of the other non-trolls from commenting. I will reserve the right to remove comments that violate the obscenity requirements our hosts have asked of us here.

Thanks all, and I hope this will allow us to continue our dialogues until our hosts decide how comments will be handled here.

I Miss Nixon December 18, 2011 at 4:04 am

it was accompanied by crony capitalism, making it wrong

Hal December 18, 2011 at 5:07 am

First, free markets reduce crony capitalism.

Second, having some crony capitalism and worldwide prosperity is far better than government oppression preventing free markets from prospering, keeping everyone in misery and poverty.

Josh S December 17, 2011 at 1:35 pm

If there’s one thing the left hates, it’s the poor not being poor any more. Witness the new definition of poverty in America as “inequality,” i.e., you’re poor because some other guy has even more than you. The left’s power is built on claiming that the only way out of poverty is increasing the power of the state, so if people stop being poor without any increases in state power, what good does that do them?

vidyohs December 17, 2011 at 8:43 pm

The left loves dependency, it is what keeps folks under their control.

vidyohs December 17, 2011 at 8:45 pm

You are simply pointing out the truth, Jon. The free man who knows he is free, and who is willing and able to be completely self sufficient is an anathema to the looney left. A free man who doesn’t need them is their worst nightmare. God forbid that that man should be an example to others and set the entire plantation free.

Greg G December 17, 2011 at 8:53 pm

And the best part about believing your ideological opponents hate you for your freedoms?

You would actually be competent to argue against such a position if you could ever find a person that held it.

vidyohs December 17, 2011 at 10:50 pm

Struck your little loon…….large looney nerve, did I?

Bwa ha ha ha! Sucka.

Greg Webb December 18, 2011 at 12:41 am

LOL! The haberdasher speaks his political philosophy of murky nonsense.

Greg G December 18, 2011 at 7:38 am

GW

Yes, it was indeed humble work. I have often been told here that libertarians would never make fun of people for that as long as they paid their own way. Imagine my surprise at finding that not to be the case.

Josh S December 18, 2011 at 12:56 pm

Get married in the Third World and then tell me you’re poor.

kthxbye

I Miss Nixon December 17, 2011 at 8:43 am

Don:

It seems to me that no Hayekian could support foreign investment, which by definition infringes on the freedom of the local citizenry and threatens the vile evil, crony capitalism.

We see this all the time. For example, BWM offers to Alabama to build a new factory, but only if Alabama will engage in crony capitalism by, for example, giving land for the plant site, uses taxes to train workers, giving equipment, using IDBonds to pay for the plant, changing utility rates—the list is endless. (You have state’s right trolls here is think this is great stuff)

Over and over on this blog you, Russ, and all the other libertarians warn against every letting the gov’t do anything that could, directly or indireclty, lead to the evil of crony capitalism.

Now, if one permits foreign capital investment in Africa, we know that cronyn capitalism is sure to follow.

IOW, Don, you have a double standard. It would be OK with you if Solyndra had taken its money and gone to India and said, “We will invest, if you give us a deal,” but if Solyndra says to the US, “We will invest, if you give us a deal,” that would be wrong.

IOW, isn’t “economic imperialism,” just two new 25 cents words for the dreaded crony captialism?

GAAPrulesIFRSdrools December 17, 2011 at 11:38 am

Don, you have a double standard. It would be OK with you if Solyndra had taken its money and gone to India and said, “We will invest, if you give us a deal,” but if Solyndra says to the US, “We will invest, if you give us a deal,” that would be wrong.

That’s your fantasy, not remotely like any Don has said.

Andy December 17, 2011 at 2:40 pm

That’s like saying there shouldn’t be any domestic investment either, because it may lead to crony capitalism. The problem is the government, not the investment. Don has been consistent when it comes to foreign governments — try to find a counterexample, the burden is on you.

I Miss Nixon December 18, 2011 at 3:45 am

no, Don is not consistent at all

he supports foreign investment, knowing such will lead directly to crony capitalism. Intent is doing something when you know what the effect will be. So say the words, Don supports doing things that he knows will lead to crony capitalism

Andy December 18, 2011 at 1:44 pm

So you’re against all investment, then, if it might lead to crony capitalism? Better remove yourself from the modern economy. That doesn’t mean you get to still play with your iPhone like the OWS kids.

Yergit_abrav December 19, 2011 at 6:42 pm

You are telling us that Don must take a principled stand against investment on the basis that politicians somewhere might be offering special tax breaks.

I suppose you would take such a principled stand too, against anything that might result in political cronyism.

Georg Thomas December 17, 2011 at 9:31 am

“BTW, if you’re in search of a really good book to introduce someone college-age or higher to the economic way of thinking …” I would never recommend Hidden Order (which is a good book) but an introduction to Austrian Economics. Quite a good showman (with words) and certainly conversant with neoclassical economics, Friedman does not begin to get across the coherenmt picture of a free economy that one gets only from Austrian Economics.

And of course, Cafe Hayek, a superb source of economic enlightenment.

I recommend Eamonn Butler’s brief introduction “Austrian Economics. A Primer” available at the Adam Smith Institute, an equally short introduction by Kirzner “How Markets Work” availablle at the Institute of Econmic Affairs, or the excellent Lessons for the Young Economist ny Robert Murphy available at the Ludwig von Mises Institute.

Georg Thomas December 17, 2011 at 9:34 am

“And, of course, Cafe Hayek, a superb source of economic enlightenment” – that sentence was meant to conclude my above comment. But then, the phrase cannot be repeated often enough. Thanks Cafe Hayek!

Andy December 17, 2011 at 10:27 am

Hidden Order is very good, but the graphs might be a little heavy-going for the less motivated. It’s really a slightly simplified version of his textbook.

JS December 17, 2011 at 3:02 pm

The references to crony capitalism need to be put into perspective. Certainly, crony capitalism lifted China and the Soviet Union out of mass poverty, as it is a better system than Communism.

For those who understand, crony capitalism is really an oxymoron, as capitalism is based on a system of private property and free, unregulated markets. The “crony” aspect is simply a term to describe the outcome of governments regulating the economy in ways that stifle competition, where some entities are given favorable treatment, etc. Government interference in the economy can never be without corruption, and its offshoot, cronyism, because it is the result of omnipotent power. It is nonsensical to suggest that the corruption springs from the private sector when the laws allow for it. If the government wasn’t legally empowered to interfere in the economy, then private entities wouldn’t be able to influence the process. Period.

With this in mind, it gets real tiring to listen to the ignorant posters here who denounce crony capitalism while advocating more government control over the economy.

This economic website is based on the spirit of Austrian economics, but a good portion of the participants are completely ignorant of it. They clog up these pages with economically illiterate childish political drivel, making it nearly impossible for someone who logs on to learn anything. It’s becoming more of a chat room.

Ubiquitous December 18, 2011 at 11:59 pm

NEWS FLASH:

Just heard that (i) Vaclav Havel died; and (2) Kim Jong-Il died.

brotio December 20, 2011 at 12:41 am

I have opened a xanga account and will forward our hosts postings there and allow comments there

http://cafe-hayek-comments.xanga.com/

I think that you will have to create a xanga account in order to comment. If this is true, it will prevent the name-hijacking that our Leftist, idiot trolls are so fond of. I do not intend to forbid comments because of name-calling, and will not forbid Yasafi, Gil, DK, GregG, or any of the other non-trolls from commenting. I will reserve the right to remove comments that violate the obscenity requirements our hosts have asked of us here.

Thanks all, and I hope this will allow us to continue our dialogues until our hosts decide how comments will be handled here.

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