Monday, October 15, 2012

An Economic Theory Experiment / Wager

I propose an experiment in order to see weather more government improves peoples' lives.  I suggest that we divide several countries into halves with more government and into halves with less government.  Then we will wait several decades and see which halves performed "better."

If the more government sides turn out to be "better," then I will admit that I have been wrong on all of my economic ideas, and I will stop supporting them.

If the halves with less government turn out to be "better," then I would like to see my political opponents on the left agree that less government is better and we should not do things like Obamacare.

Is it a deal, those of you on the left?


First we should define what would make one side better than the other.  A half country that has a higher per capita GDP, higher average personal income, fewer famines, and less cannibalism than the other half should be declared to be "better."

Next let's pick our countries.  I propose to pick three countries and divide them in half.  We should select a variety of countries so that we get an idea for how well more or less government works with multiple backgrounds.  And these countries should be similar culturally and have similar people languages and natural resources too.

One country should be a productive, advanced, a culture with a good work ethic, and full of technology.  We might ask to find this country after a big war wiped it out so that the whole thing will be starting from the same place.  Let's call this first country "Germany."  And then let's split in in half along a north and south line.  We will call the "less government" side "West Germany," and the "more government" side "East Germany;" just for our experiment, you see.

For our second country let's pick another smallish country that was just devastated in war, so that both sides start the same.  But for this country let us pick one that is less technologically advanced, one that has less literacy among its citizens, and is generally poor.  Let's call our country "Korea."  And because we split "Germany" into east and west let's split "Korea" into the "more government North" and "less government South."

With these to experimental countries we will get two clear example of what happens when we give one side a whole bunch of government and the other side not much government.  These countries were similar throughout and therefore everything but the amount of government should be equal between them.

These two countries are a good start, but I'm so confident that I'd like to pick a third country and bias the results extremely for the "more government" half.  I believe that that a country will be so much better with less government, that it will be able to overcome the rest of the country which has more: people, schools, natural resources, culture, history, arable land, etc.  Let's take a great big country with all sorts of advantages and split from it one uninhabited  rock of an island.  We'll make the big part, which has all of the advantages the "more government" half and the near barren rock the "less government" half.  Let's go with "China" as the big half, with more people, land, arable land, culture, schools, and natural resources.  And we'll call the bare rock, "Hong Kong," which might be a near uninhabited island with only a natural port for an asset.

I think that the rock called "Hong Kong," just by virtue of having less government, will turn out better than the other half of the country.

I'm staking my whole bet, of declaring my side wrong, on one rock versus a huge country with all sorts of advantages.

My Predictions:

My first prediction is that even the countries that favor more government at first can prosper once they loose most of that government.

I predict that the half country we decided to call "West Germany" will have a higher GDP per capita, higher average personnel income, and will be, all around, a better place for its citizens than the half that we decided to call "East Germany."  In fact I'll do one better: I'll bet that "East Germany" will import garbage from "West Germany" because that is a better source of income for "East Germany" than almost anything else.  And I predict that less government "West Germany" will be as prosperous as almost anywhere else on earth.

Crumbling facades: A courtyard on Markt Strasse in Erfurt, 1991. Photographer...
East Germany 1991 w/ communism

He returned to the same places 10 years later. The same courtyard in Erfurt in...
East Germany 2003 w/ some freedom
(Check this photo gallery out for more communist "before" pictures and more free "after" pictures.)

I predict that "North Korea" started poor and will, after several decades of more government result in terrible famines and many cases of cannibalism.  This half will be so poor that its GDP per capita and average personal incomes will be amazingly small.  And I predict that less government "South Korea" will be as prosperous as almost anywhere else on earth.

File:Korean peninsula at night.jpg
China, North Korea, and South Korea at night

Remember the rock island we separated from a huge country?  I predict that that rock, whose only advantages were a natural port and less government, will become one of the most prosperous places on earth.  It will become so because it has even less government than even the other "less government" places on earth.  I predict that the rest of that huge country will see tens of millions of deaths, despite its great population, culture, education, etc., and more government.  And millions of people will flee the great big country, with all of the advantages and more government in order to live on that "less government" rock.
Hong Kong
Above: Shanghai, China w/ lots of government  Below: Shanghai, China w/ less government

(Shanghai picture from here.)


Well, my liberal/ leftist/ communist/ socialist/ Democrat friends, would you care to make a prediction for what would happen if we split these three countries into "more free" and "more government" parts?

I'll admit that my side is wrong if our experiment shows that your "more government" side results in more prosperity for its citizens.

What do you think?

1 comment: