Saturday, July 30, 2005

Learning Political Economy by Example

We now know that the former Soviet Empire was an economic and environmental catastrophe. We know that Cuba is poorer today than it was before the revolution. We know that people die by the millions of starvation in North Korea. We can see what a difference capitalism made in the People's Republic of China. We should know that Socialism is a recipe for poverty. Nevertheless, countless Communists, Socialists and anticapitalists in this country and others remain intent on imposing a discredited, failed economic model on their fellow citizens.

Capitalism, however, comes in a large number of flavors and to make capitalism successful you have to do it right. Some countries do it poorly. Others do it amazingly well while others sometimes change their ways for better or worse. I find two examples particularly instructive: Sweden and Ireland. Sweden has over the last generation gone from being the fourth richest nation in the OECD to the seventeenth richest. Meanwhile Ireland has gone from being one of the poorest and most hopeless countries in Europe to the second richest -- tiny Luxembourg is in first place at present.

It should be obvious that Sweden, richer than Ireland in natural resources, blew it big time. Where did it go wrong? What seems to be a sound analysis can be found here: Swede and Sour.

It should also be obvious that Ireland suddenly started doing things right. What was the Celtic Tiger's primary secret of success? Find out here: Celtic Tiger.

Several of the former eastern European satellites of the Soviet Union in search of a role model for economic success appear to have settled on Ireland. An overview of some of what they are doing can be found here: A Flattening Solution. Bulgaria is joining the party and tiny Estonia is growing its economy so rapidly that some are beginning to call it the "Baltic Tiger".

The varying European government economic policies and programs and their track records of success and failure can be instructive to the American voter. The Communist minority in the Democrat party favors the failed Soviet model. A much larger group of democratic Socialists (A.K.A. Progressives) who roost in the Democrat party favors the failed Swedish model. Republicans in the main favor the successful Irish model. Please choose wisely.

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