The point I'm making is that the £1m came from somewhere. Now yes sometimes it came from a Mafia sex slave operation or whatever, but those are minuscule edge cases on the scale of say the UK economy. We're talking about the economy in general and what makes on economy more valuable than another one in economic terms.
A hundred billion here, a hundred billion there, after a while the money laundering starts to add up: https://www.opendemocracy.net/en/odr/uk-losing-fight-money-l...
The UK economy offers a unique mix of commercial fairness and predictability, achieved by a comparatively incorruptible commercial court system, with disinterest in where the money actually comes from provided it isn't UK crime.
Whereas in China, for good and ill, billionaires are not above the state and can get clobbered when they become politically inconvenient. Such as Jack Ma.
(A question nobody is asking in this thread: what's the relative price of a taxi in, say, Lowestoft? What does that say about the regime there?)
That's less than Roman Abramovich paid for one Chelsea player. There's probably been more than £10m of donations to the Tory party alone from oligarchs. Try again with a more realistic figure.
https://www.theguardian.com/politics/2020/sep/21/tory-donors...
Look, you can bring up minuscule footnotes in Appendix F of what matters to the UK economy as much as you like. Yes these things suck. No they are not even remotely consequential to why a taxi driver in London, or Londoners in general earn what they do or how a modern economy functions.
The more time you spend obsessing over incidental edge cases, because they are things you can get enraged about and get a good adrenalin buzz over, the longer you will be mind blastingly uninformed about how the word really works.
Assuming it’s not illegal money and no coercion was involved, then by definition the customers must have believed that the cosmetic operations were worth it, at least at the point of purchase. Since cosmetic surgery is much less burdened by regulation, externalities, and so on, I would say the prices charged are reasonably close to the market clearing price.
The surgeons in Africa may or may not be subject to greater distortions depending on the local market.
Though I imagine cosmetic surgeons specifically in Africa are paid about the same relative to their skill level, staffing level, and facilities?
Spare me the Econ 101, Harley Street is a status symbol, the doctors there are not more highly paid because they're objectively safer or more skilled.
I guess we could call Africa's history of conflict, exploitation and colonialism, and usurious loans from the World Bank to leaders who aren't interested in their citizens' welfare, a distortion of the local market.
This goes for loads of stuff. I would wager a $30 meal to be fresher than a $5 meal on average. I'm not saying there aren't any $5 meals that are fresher than some $30 meals, but just that the $30 has a lot lower chance to make me sick.
This is a purchasing power parity argument; moving people around in London is "worth" more because they have more money, and money that is more valuable on the global exchange rate market.
An economy in which the people have multiple times the purchasing power must do something right. And moving people in that economy around is more valuable than moving people elsewhere.
As an African that's an easy answer. They stole it.
Before you all go clutching your pearls: it's beyond impractical to even suggest paying it back nor would I even want to think about that. Not an option. not suggesting it.
But don't pretend it's because you're special. You stole it. Just own it.
Yes these thefts did happen, our big trading companies were basically organised piracy and extortion. There is an argument that we're still benefiting from investments in infrastructure and social development back then.
That's not why anyone in London today earns more for similar work than people in China or Africa though. You can't apply that argument to say Japan, South Korea or Taiwan for example, or to China today. 20 years ago the Chinese taxi driver would have earned 1/10th of the London taxi driver. Now it's 1/4. Britain burning down the Summer Palace in the 1860s is just not a factor in the reasons for why it used to be 1/10th in 2000 or is now 1/4.
If you think the UK has an advanced economy due to 19th century colonialism you then need to explain the development of countries like Taiwan, Japan and South Korea. Japan went from feudal backwater to major global power in 80 years, and it completed that transformation 80 years ago. If you don't believe the UK did anything worthwhile in the last century to earn it's way and is free riding on the profits from stolen Zimbabwean tobacco from 1910, ok fine, now explain Japan.
For example, if not for India, Britain would be absolutely destroyed after WW2 and would be far from their current position in the 21st century (assuming allies still somehow win, big if). India was Britain's cash cow and is the reason why it survived the war.
Germany put the lie to imperial supremacy in 1940 when they comprehensively but-kicked France and Britain. They proved that industrialisation is what mattered and by then imperial mercantilism was a distraction. We were only saved by the English channel, and yes thanks to India. The fact we had India undoubtedly saved us, but in a last ditch final card up our sleeve that kept us in the game kind of way. Not in a trump card that meant Germany never had a chance from the start kind of way.
By the 20th century, I think you could say colonialism didn't pay off. But it was also the seed capital for a lot of europe's industrialization. The same thing happened with Japan - their defeat of China in the Sino-Japanese war resulted in an indemnity that underwrote the Mejji restoration.
As for Japan, they did do well out of the war, but they were already rapidly industrialising at a much faster pace than their neighbours. That's why the won the war in the first place. The scale of the reparations might optimistically have paid for a few years of industrialisation and investment, but over the 4 decades between then and the next Sino-Japanese war that's basically a marginal difference. The second Sino-Japanese war merged right into WW2 so was too late to have any major effects on overall national development.
Not really. The japanese ships were, iirc, mostly built in britain and germany. Plus, the chinese had many more ships. I've read that corruption and morale were important factors, but I don't think relative levels of industrialization mattered that much. Bear in mind, Japan did not build things like engines domestically until the 20th century.
Further, the indemnity was nearly four times the annual national budget, and paid in pound sterling. That's more than a 'few years'. That's absolutely transformative. Not to mention the capture of chinese naval vessels, territorial concessions, etc.
> Most exports of industrial goods went to other developed countries.
Depends on the era. The basic point I'm making is that early industrialization, i.e. the wool trade, then the cotton trade, were generally export-driven, and export-driven to west africa. The cotton industry was also underwritten by colonialism insofar as it was predicated on slavery.
Pointing to countries that did not have direct roles in colonialism (although a surprising number of countries you wouldn't think of actually did - i.e. demmark in the slave trade) ignores the fact that colonialism basically amounted to a massive and sustained cash infusion into western europe. The spanish conquests of the new world, for example, brought so much gold and silver into europe they crashed the spanish economy, but I think it's obvious that this gold would have quickly escaped national borders and funded colonial and industrial ventures across western europe.
Looking at Britain, most of the imperial revenue flowed to the gentrified classes and into their estates. The industrialisers were mainly middle class domestic manufacturers and it's the growing friction between these two sides of the economy that drove political conflict and reform in Britain.
Most of Europe had no third world empire. As I pointed out, Germany proved conclusively that Empire was irrelevant. Spain and Portugal had huge Empires and just fizzled out because they didn't industrialise. France also failed to capitalise on Empire in ways that mattered long term.
China also has industrialised rapidly over several decades, and their imperial assets in Tibet and Xinjiang played no significant role in this. What matters is policy and economic culture. This is what distinguishes say Israel from it's neighbours. They're similar sizes, similar resources but night and day in terms of development.
I feel like I'm understating them. I'm getting my overview of the amounts from this paper[0], but in principle, even getting paid a part of the costs of a war is a very good deal, because that money usually goes entirely to your own economy (since they are supplying your military), you get essentially free training for your military, you get prestige, and you get the actual war aims (in this case, control over Korea, which is in itself lucrative).
If you consider another colonial war, the second opium war, the chinese government indemnity in this case didn't cover the costs of the expedition (iirc). However, it's still a really great deal, because you get access to the chinese market, which is worth a ton, and the state finances themselves aren't negatively impacted because the indemnity is enough to cover costs.
I think it's probably true that by the time Germany reunified, empires weren't always that worthwhile.
I don't totally disagree with your culture idea. I just think there's nothing worse for a nation's political culture than being colonized, and it's also terrible for the economy, so it's unsurprising that almost every first world nation was either never colonized, or if it was, is currently ruled by a seceeding group of the colonizers themselves (e.g. the USA).
[0]: https://eprints.lib.hokudai.ac.jp/dspace/bitstream/2115/3069...
Japan achieved this by looking to countries like England as an example and becoming an imperialist and colonizing parts of Southeast Asia - kicking out some of the European countries who held those colonies in the process.
So yea they did the same thing to get wealthy - stealing resources.
Look at Germany, they never had any significant empire, but they still brought rest of Europe including the imperial powers to their knees in 1940. That conflict showed that the imperial mercantilism of the previous centuries just wasn't relevant anymore.
If imperialism was so great, there's no way Germany should have conceivably been able to roll over the imperial superpowers of France and Britain. The only thing that saved the UK was the English Channel. What mattered was industrialisation, along with economic and financial liberalisation. Every country that has done well in the last 100 years, except a few resource states like those in OPEC, has done so this way.
It the value literally came from somewhere else (geographically), funneled through the financial district and spread to the local economy. London is the bay area, but for bankers.
The City of London has been laundering money for centuries. Lately, there's a lot of Russian/former soviet oligarch money sloshing about, and the Square Mile doesn't ask too many questions about source of funds. Not too long ago, HSBC was slapped on the wrist for laundering cartel money.
This keeps getting brought up but it's inconsequential at the scale of the total economy. As I pointed out elsewhere already on this thread, total Russian inward flows to this country accounts for about 1% of foreign investment. Now yes absolutely, foreign investment is a significant factor in the UK economy, about 20%. That makes a big difference, but Russian oligarch funds are not a significant part of that, they're just a politically and socially highly visible one that gets talked about a lot.
The reason London is a centre for laundering money is that it's a massive mainstream finance centre. So yes, you're on the right track, but you're obsessing over a small forest footpath and missing the mainstream economic motorway right next to it.
US FDI into the UK is more than 30x that from Russia. That from the EU is even bigger. This is the stuff that moves the needle.
Being essentially a colonial slave does not help at all increase labour productivity, nor valorizing labour. Having no ownership of the capital your labour is used into doesn't help.
From that on you can very easily get a 100 year setback economically. Then you have to play catch-up economically. That's where the social dysfunction, literal assasinations, and ethnic regimentation kick in :)
Sure it's not 100% about colonialism, but that's the deciding factor.
The case of Britain vs China isn't a particularly interesting one in this dynamic: it's just the dynamic great powers have always had within their group. The older state has more momentum but is sunsetting. Their wealth still comes from the exact same place, they just haven't quite equalized yet.
I see you avoided mention of South Korea or Taiwan. Israel is another example. I'm actually pretty bullish on Iran if they could kick out the clerics, that country has massive potential.
I think it's fair to characterise China as an imperial power, but how much of their current economic power actually comes from controlling say Tibet or Xinjiang? Those are marginal backwaters. They get a bit of forced labour and cheap vegetables. Maybe some minerals, but nothing they couldn't have bought fairly cheaply from Australia.
Do you actually, genuinely think not having their peripheral controlled territories would have prevented China developing? Seriously?
Your bottom line might still be correct however, wealth is a measure of resources and resources are more or less distributed in a zero-sum game. Whenever someone won something, someone else lost something. The importance of the English Empire and their naval dominance isn't something to downplay, and something they indeed should "own", rather than dismiss.
You're actually the first to mention the slave trade in the chain -- the discussion was just about wealth. Latin America is still also poor when compared to the "developed countries" at the top of the economic food chain, and their people weren't exported as slaves.
But the economic and political structures left by colonialism (both internal and international) meant that the people from these countries could never get out of that hole. Ultimately, people in Finland live much better than in Bolivia because there's a lot more money going around to build nice infrastructure, pay for teachers, quality goods, food, and so on, and where this money comes from can be traced all the way to colonialism.
Nokia couldn't have existed in Bolivia, even though the raw materials to make phones can be found there. It lacks absolutely everything else that is required to maintain a company like that: infrastructure, education, political stability. And the reason why this country lacks all of these things, is this "historical injustice". It's not only that the wealth was stolen, but also the capacity to create more wealth was stolen, not just the cobalt, but also the hypothetical industry that could have generated wealth for the people of the country.
It was definitely colonised, lost all it's forests for the navies of the Empire, and yet is actually pretty rich today (although we still have a lot of post-colonial syndrome, to be fair).
Current wealth: English-speaking, ridiculously tax-incentivized corporate portal to Germany’s economic area
As another African, your logic and morality are a disgrace.
Yip, they sure stole a lot of stuff - as of course did the Mongols and the Aztecs who are now dirt poor. In addition, the Ventians and Swiss never colonised anyone and are/were dripping cash.
But your comment is already a lot more nuanced than the OP's lazy clichéd statements.
A hell of a lot of their wealth also came from, amongst other things:
- individual rights - e,g, Magna caerta - no theft involved
- invention of limited liability corporations
- cadastas and private property rights (no theft involved)
- common law based on precedent (no theft involved)
- investment in mechanised warfare (to keep what they made and stole, see Mongols above)
- etc. etc.
Once only has to compare Singapore (colonised by British and Japanese) with Ghana since independence in the 1960s. Singapore has no water, no resources, no power, is surrounded by hostile neighbours, but is absolutely loaded. Ghana is resource rich and dirt poor.
You can decide for yourself who implemented the list above and who did not. You can also guess who is going to keep digging the hole they are in.
But I guess in certain progressive circles, "they stole it" passes for a rigourous analysis. [ And they get the bonus of claiming the moral high ground of being the perpetual victim ].
The OP should read Hernando de Soto instead.
In essence: it is the effect of the entire European world coming in, taking whatever they want, and then absolutely ensuring that independence would be doomed to fail. These economies fail because they're not modern. If Europe wanted Africa to succeed post-colonialisn: it could have helped train people, build infrastructure, etc. Instead they secured rights for foreign companies to continue the work of imperialism even today.
They can't face the facts and want to hide their ego behind simple cliche statements that don't capture even 1% of the reality of history.
Do the Crown Jewels produce billions of dollars daily that gets handed out to each citizen?
Or was it actually the British creating ships, goods, establishing trading posts, furthering science and creating the newest machinery etc... that created their wealth? (And still creates it to this day)
And since we are on the topic of the South African 'Star of Africa', the astute investor should note that those muppets in South Africa are busy changing their constitution to allow the expropriation of private property from their own citizens (never mind evil foreigners) a) without compensation, and b) just for kicks - without recourse to the courts.
So I ask you: would you be happy if your pension administrator sold up in Switzerland and USA invested your retirement in South African farms and factories?
It will impoverish them further, and yet it will be someone else's fault.
This is how we in Africa roll.
> It will impoverish them further, and yet it will be someone else's fault.
I've noticed certain parallels between segments of South African and American society: people who feel they have been left behind by a wealthy elite that doesn't care about them, and are willing to burn everything to the ground and start anew. Cue a charismatic politician who radically panders to them (despite being part of the elite), the only differences are that South Africa has objectively worse inequality, and has a longer political cycle.
Setting up trading posts and controlling the beginnings of truly international trade over 200-300 years ago... I would think that would set a country up well moving forward, and somebody eventually had to do it. British were one of the first.
If Europe was able to develop off the back of exploiting African resources, how come in the several generations since, Africa hasn't been able to develop off the back of African resources? What about all the developed countries that never had any significant empire? There are plenty of them.
Nope. Sorry, you can't whitewash the facts so easily, us from the former colonies won't let you!
https://voxeu.org/article/economic-impact-colonialism
> If this is right, then a third of income inequality in the world today can be explained by the varying impact of European colonialism on different societies. A big deal.
> how come in the several generations since, Africa hasn't been able to develop off the back of African resources
Who says it hasn't? I invite you to look at graphs at https://gapminder.org/tools. You must avoid the natural binary thinking tendency, there is a whole spectrum between "developing" and "developed". Don't forget that factors like geographical/religious/linguistic etc affect speed of development. Why are black people in the US still not doing well, despite living in the richest country in the world? It is hard to get out of the vicious cycle of poverty.
> What about all the developed countries that never had any significant empire
Hmm, sneaky attempt at changing goal posts - I never said colonization was necessary for development!
How did your African country get all this modern tech that you didn't work towards to invent? How are you using the internet? You must've stolen it.
Maybe some countries simply have a good flow of education --> production --> exchange high quality goods for currency.
Explains how a small island in north Europe with a weak military and flagging economy is on the UN security council.
Unironically, yes this is how capitalism works. If you have resources, you leverage those resources to produce goods and services that increase your total wealth. If I were to walk into a bank and steal a couple million dollars, maybe I could leverage that money into a successful business. Maybe so successful that it produces inner-generational wealth, so that my great-great-grandchildren are on average more wealthy than they would have been otherwise. I may have "earned" this money with my hypothetical business skills, but it doesn't change the fact that I only had the opportunity because I stole the money.
So yeah, many enterprising individuals took land and resources (and plenty of slave labor) from the Americas/Africa/Asia for hundreds of years, and were able to leverage those resources into even more wealth, thus people in London have more money, thus taxi drivers make more money.
The value of the UK economy, since around 1930, has increased in PPP terms by about 90%. So there's a reasonable argument the value in 1930 was partly down to imperialism, although I think industrialisation was a much bigger factor. Still, the 90% of our economic value we accrued since then certainly didn't come from colonialism, so where did it come from?
Look at Japan, yes it had an empire for a few decades before WW2, but that was mainly a result of industrialisation that had already happened, not a cause of it. Look at what's happened in China since it opened up and liberalised it's economy. At least they finally, finally figured this out.
Also taxi driving isn't exactly the most efficient of markets to compare value. London taxi drivers for example have a unique barrier to entry to become a taxi driver via an onerous road memorization test ("The Knowledge"), and that has nothing to do with the general British economy "doing something right."
By the same token you could say that moving money for the mafia is more valuable than preventing violence and disease in poorer societies.
I suspect the root issue here is what we consider to be value, or what activities are valuable and how value is generated. The common critique of capitalism is based (often unknowingly) on the Marxist theory of value which sees the vast majority of economic activities as parasitic of value, particularly financial activities, and if that's the issue here sure I'm quite willing to debate on that.
Value, whether measured in safety, shelter, nourishment, entertainment, ownership, infrastructure, sense of belonging or whatever you wish, is best built when you can trust the people around you and thus focus your efforts on what is valuable rather than trying to prevent being hurt or robbed.
Note that above I didn’t count money as valuable, since it isn’t intrinsically.
As a former Londoner, absolutely yes. London as a city is extremely parasitic, especially when it comes to time and standard of living. It does provide value when you're either so poor or find it so hard to get a job that working there provides you enough value, or you earn such "screw you" money that you can afford to live a comfortable life there. But for anyone outside of those groups, it's best avoided unless you're just visiting for the sights.
https://www.youtube.com/watch?v=5uM2cdhfAGA
This is the reason that there's so many rich Russians knocking about e.g. https://old.reddit.com/r/soccer/comments/p83ljc/offshore_adv...
They did well to hold on to it, though.
.. and on all those metrics China came out much worse (the civil war, no marshall plan, proxy war with the US, communism), as well as not having the massive advantage of having been an industrial power long before the war.
This article dates the takeoff to 1978 (Deng), which seems reasonable: https://www.stlouisfed.org/publications/regional-economist/a...
Perhaps the question should be "at what date in the future do we expect the cost of a taxi in London and one in Beijing to equalize"?
A London taxi driver is not paid more because his work is somehow more valuable than a Beijing taxi driver's, it's just because everything in London is expensive. That's just basic economics. Read an economics book.
How did everything in London get so expensive? Read a history book about the last few centuries.
Seems like you're just some typical western chauvinist with no real argument.
They had sayings like: "doesnt matter if you lie or stand,you will get 3 thousand at the end" (what meant that there were no rewards for those who worked harder).
There could have been some islands of efficiency (perhaps in closed cities where workers could get accused of being spies if they didnt try hard enough) but for generic workers efficiency did not matter.
And I dont even write about inefficiencies of central planned system itself, where rewards did not come from market forces + falsified statistics on top, so nobody even knew the truth.
Even the communists knew that their system is inefficient, which you can see in many places. For example in "aquarium" novel by Suvorov one of the spies talks how they run out of meat and bread, but the system got so inefficient that it run out of people to murder.
USSR didnt work people harder. Political prisoners yes, but the normal people were incredibly ineffective. Even films made during communism laughed at that.
Don't fall for it. It's thinking like this that leads to managers optimising for the wrong metrics. Hours worked is clearly the wrong metric. Companies don't exist to simply employ workers for long hours, and thinking that way leads you down the wrong path right from the start. You need to look at where the value actually comes from, and this is sometimes subtle and not at all obvious.
Here's a challenge. A taxi driver in London earns about 4x what a taxi driver in Beijing does, in objective international value terms. Why? What factors might lead to that difference? If your value system can't answer that question, then it's wrong. They do quite legitimately earn 4x as much because the work they are doing is worth 4x as much, and there must be a reason.