The Virtue of the AughtsYear-end reviews on television and in the media in general have been full of hand-wringing, both about last year, and about the ten-year period from 2000 through 2009. I have found it all rather self-pitying and unseemly.
Finally, I find a voice of good sense, not surprisingly in Tyler Cowen, in the New York Times, pointing out that many parts of the world saw great improvements in that period.
Still, most economic models suggest that the fundamental source of growth is new ideas, which enable us to produce more from a given set of resources. To the extent that the rest of the world becomes wealthier, there’s more innovation, as my colleague and co-blogger Alex Tabarrok, professor of economics at George Mason University, argued recently. China, for instance, is moving toward the research frontier in areas such as solar power, scientific instruments, engineering and nanoscience, all of which can benefit the United States. Unlike the situation of just a few decades ago, a genius born in Mumbai now stands a good chance of becoming a notable scientist, whether at home or abroad.Cowen has an "accompanying" blog post citing other pieces of evidence as well for his view.
... a wealthier China, India, Brazil and Indonesia will lead to more customers for new innovations, thereby producing greater rewards for successful entrepreneurs, no matter where they live. There are so many improvements in cellphones these days because there are so many cellphone customers in so many countries.
TO put it bluntly, if the United States takes one step back and the rest of the world takes two steps forward, even in purely selfish terms we should consider accepting the trade-off, if only for the longer run. Most of us gain from the wealth and creativity of other countries, even if we can’t always feel like the top dog.
He finishes with a comment on the hand-wringing:
Again, I'd like to stress the general point that most American-born economists are not sufficiently cosmopolitan in their thinking and writing.