In this modern world there’s really no excuse for population poverty other than bad economic policy. Sure, it takes some time to reverse however many centuries of such bad policy there have been but it can be done. As those booming recently poor places, growing at 5 and 10% a year, show us. It’s also possible, of course it is, to institute bad economic policy which then, over time, will make a place poorer - Venezuela and Zimbabwe have shown us the dangers of MMT for example.
Or there are slower versions of bad policy:
The EU executive is considering a target that would see 40% of the bloc’s clean tech made in Europe by the end the decade, as part of a response to a wave of subsidies from the US and China.
According to a draft of the EU’s Net-Zero Industry Act, which is due to be unveiled next week, 40% of green tech needed to meet the bloc’s climate and energy targets should be made in the EU by 2030.
This is to get the point and purpose of production entirely the wrong way around. This is to assume that producing something makes us richer. It doesn’t. Being able to consume something is what makes us richer. As Adam Smith pointed out, the sole purpose of all production is consumption. Once we’ve grasped that then the purpose of trade becomes clear. If someone else can produce what we desire to consume better, cheaper, faster, than we can, then we should gain our consumption from that production of that other person. This does not change whether it’s the other adult in the same household, someone in the same village, county, country or some near random stranger 11,000 miles away. If we can gain our consumption better by gaining it from them then it’s from them that we should gain our consumption.
Here the EU is making the opposite assumption. That gaining our more expensive, later, worse, consumption from someone nearby is better. That it is going to be more expensive, worse, later, is proven by the very fact that they’re looking to have a law about this. If it was already going to be preferable on speed, cost and quality grounds then there would be no need for a law, would there?
Basic economic theory really does matter. Otherwise the political types are going to institute bad economic policy, that very thing which makes us all poorer.
Oh, and it’ll reduce the amount of climate change mitigation done too. As the Stern Review pointed out, humans do less of things as they become more expensive. So, limit climate mitigation within the EU to the more expensive domestic production and less of it will be done.
Both broiling us and impoverishing us just isn’t a good outcome from economic policy now, is it? But as we’ve already said, bad government is really the only cause of poverty in this modern world. Perhaps we should stop having bad economic policy?