In the first decades after World War II ended, Germany, Japan, France and even Italy did well. So they earned A or A-plus grades. Then, increasingly after 1960, new growth winners emerged: On the Pacific Rim, hot on Japan’s heels followed Taiwan, Singapore, Hong Kong and South Korea.
 
In the European Union, core countries such as Britain, France and Italy began to lose the momentum that the successful American Marshall Plan had stimulated. Gradually Spain, Finland, Norway, along with Holland and Belgium, gravitated to being lead bicycle riders in the growth sweepstakes.
Which regions were notoriously absent from the good-news headlines?

Sadly, many of the African countries that newly got their independence degenerated into one-dictator regimes. And, alas, in the Middle East, except for places generously blessed with oil resources, both the economic and the political scenes have been pitiable.

In contrast to today’s positive growth in China and India, a couple of billion folk who lived in those places between 1950 and 1970 were faring badly when so many of their neighbours were developing so rapidly. There is no mystery why mainland China stagnated miserably. Mao’s brand of communism was perpetually a dismal failure. Steel mills in the backyard were a joke – a bad joke.

Now we know what could not be understood back then: The Chinese population, given a chance to thrive in market economies, did possess tremendous potential. Mercantile successes by Chinese outside of China – in places like Malaysia and Indonesia – suggested strongly that the epoch after Mao’s death could be the great success that has actually taken place if only the market would be given a try.

Liberation from the empire
The Indian story involves some essential differences. The British Empire had brought considerable schooling to the Indian peninsula. After liberation from the empire in 1947, Indian’s great leader was the aristocratic Nehru, who favoured bringing from the West economic advisers steeped in British Labour Party Fabianism. Therefore, the Fairy Prince of the market mechanism was late in coming to awaken India from its sleep. But better late than never.

Economic history teaches no simple lessons. But the weight of past experience suggests strongly that one-party bureaucratic organisation of production and consumption does a bad job everywhere in giving people a good and growing standard of living.

Be warned, though. Don’t go from one extreme to another. No one knows better than 21st century economists that unregulated laissez-faire market mechanisms – unchecked by democratic governmental regulations and sensible macroeconomic policies – will generate both systemic income inequalities and boom-and-bust business cycles.

Before the 1929 Wall Street crash, pretty much pure capitalism prevailed, not only in America but also throughout the advanced West. Back then, before the age of penicillin and CAT scans and echograms, physicians also were limited in their ability to cure diseases and prolong quality of life.

Economic science was in a similar fix. It didn’t know then how to temper and attenuate the vicissitudes of economic fortune. That’s why economics had long earned the title the Dismal Science.

Personally, I knew all that well. The economic textbooks read at our top universities had little to say about the great worldwide depression as it worsened after 1929. Harvard and Chicago were alike in this respect when I attended them on comfortable scholarships. But both were late in recognizing the actual new facts of life. That was then. This is now. Probably France in the next few years will pick up steam under its new President Nicholas Sarkozy. Fanatical US patriots will then say, “France’s new success comes from aping the American pattern.”

Universally true
That’s a wrong interpretation. Yes, America’s business cycles have gentled down considerably. But this has been universally true. I’d prefer to say that such future French successes (if they materialise) are because they have begun to do some of the things that Ireland and Finland have been doing.

What are they? Among other things, the past activities of strong US trade unions dealing with Americans Fortune 500 corporations have vanished. Why? You might say that the AFL-CIO big unions committed suicide in the new free-trade globalized environment because every past union ‘victory’ actually betokened a defeat, which speeded the exit of US of auto, computer and myriad other manufacturing activities.

My sermon is not aimed for people abroad. Bush-Cheney Republicanism has been harmful in both Iraq geopolitics and its encouragement of corporate misgovernance. That’s why the Democratic Party is most likely to sweep our November 2008 elections. In the present scenario, non-centrist wings of the Democratic Party can gain considerable advantage. Republican strategists hope they will grow. Since the US electorate has not turned leftish en masse to any appreciable degree, the best last hope of the Machiavellian Republicans is that 2008 Democratic candidates for office preach protectionism and anti-market phobia.

Defining and reaching the optimal centre is not easy. And by definition, the centre is duller than the dubious extremes that surround it. Two basic truths will dramatize this. 1) Pruning back the give-to-the-richest tax breaks of President Bush’s will little affect America’s Schumpeterian innovation propensities. A good reason to do that pruning. And 2) However, at best, most of the new inequalities traceable to globalised and internal free trade cannot be achieved by any feasible acts of good government.

Centrist improvements are important but modest. Dramatic proposals from either the left or right will once again be proved in the long run to be fools’ gold only.

© 2007 Paul Samuelson Distributed By Tribune Media Services, Inc.