A gimlet-eyed look at developments in the global economy, in which interesting and sometimes ominous things are happening.
Former Economist editor Davies opens his account in Aceh, Indonesia, where, following the 2004 tsunami, devastation was met with surprising elasticity on the part of local entrepreneurs, such as one who “ignored advice to relocate away from the coast and instead returned quickly to his village to rebuild his life.” Responding immediately to disasters is a hallmark of an agile economy, and, as other economists have noted, disaster can be a strange kind of positive externality, since it provides opportunities to rebuild with newer and better methods and materials. Glasgow conversely suffered because it was slow to rebuild following World War II, like much of Britain, leading other nations to surpass it in such things as shipbuilding and making autos. Davies examines nine places that illustrate economic choices for failure or success, from the disaster economies of a Syrian refugee camp and a Louisiana prison to a modern Japanese town whose population is rapidly aging and the capital of Estonia, a nation at the forefront of modern technology. His case studies represent challenges that include natural disaster, economic inequality, and the rise of robotics and artificial intelligence and their displacement of human workers. Lessons abound, including the remarkable fairness with which Acehnese gold traders repurposed traditional methods of finance and “provided its entrepreneurs with rapid access to cash.” Contrast this with the predatory nature of the Chicago School economics visited on Chile after the military coup of 1973, with Milton Friedman et al. delighting in an experimental setting “untroubled by democracy.” Chile’s economy finally grew, becoming a success story, at a price: Inequality is extreme, and services such as health care are delivered only to those who can afford them. Davies concludes that a decade hence, given the trends he remarks on, most people on Earth will live in “an urban society that is old, technologically advanced and economically unequal.”
Highly recommended, sobering reading for anyone interested in the economic future, for good and bad.