Why do Nations fail?

[BabelHuber]

I forgot this:

I mean, I could answer "Spain was technologically backward in the late 18th century due to a mix of causes, France was bankrupted by the monarchy and then wracked by repeated civil and foreign wars, and Prussia was a militarized state without the wealth of pre-existing infrastructure and trade opportunities enjoyed by the British."

At the time of the french revolution, the industrial revolution in England already has progressed quite far. When Napopeon blocked imports from England to continental Europe, factories were founded e.g. in Prussia, e.g. for cloth fabrication. After the import ban, most of them went out of business again because they couldn't compete with England-made products.

It took decades for continental Europe to catch up, e.g. Germany became a serious competitor to England in the second half of the 19th century.

So I think one has to look at the end of the 17th century/ beginning of the 18th century, where the industrial revolution started.

France was trying its state-controlled 'mercantilism' at this time. Prussia was an army backed by an agricultural country. Spain was a backwater because its kings lived from the gold and silver of South America for centuries, thereby neglecting internal advancements in Spain itself.

England already was much more advanced during this time, expecially regarding the predictability of legal decisions and the high level of investment security. This development started with the Magna Charta in 1215.

Robinson calls this 'inclusiveness', and it seems sound to me.

But he went way overboard in applying this to ancient Rome, China and whatnot.

[Simon_Jester]

The problem is that you can't invent a theory to conveniently explain one thing and then ignore its total failure in other cases. That's the equivalent of firing a rifle blindly at a wall, then drawing a bullseye around the biggest cluster of bullet holes, and claiming you're a good shot because you hit the target so many times.

There are a LOT of explanations, more than anyone can easily count, for why the UK was uniquely placed to have an industrial upsurge in the late 18th and early 19th centuries. Among its advantages, off the top of my head and in no particular order:

1) Freedom from being directly pillaged in the Seven Years' War or the Napoleonic Wars. Having armies march back and forth over your country can set back your economy five to ten years quite easily, especially when wasted productivity and loss of able-bodied manpower are factored in.

2) A large maritime trading empire that provided an incentive for mass production of export goods. Heck, arguably two such empires; the trade with America and the West Indies would have constituted a trade empire in its own right, and then there was the trade with the East Indies and China on top of that.

3) Good internal transportation from previous eras (canals, rivers)

4) A political system that was just liberal enough that the British public felt no need to openly revolt against their lords and masters, even if it was painfully oppressive in some ways by modern standards.

5) Easy access to rich deposits of coal and iron, in (fairly) easily accessed locations.

Again, this is not an exhaustive list. Nor is this a list of things that existed 100% in Britain and 0% anywhere else. It is a list of several things that various people at various times have pointed out as giving Britain an advantage in industrializing. Combined, it's not hard to see all the numerous factors in play as having given them the 10-20 year head start they historically enjoyed.

So there is no need to try and take the rich complexity of real history and real economies, and compress it all into this single-axis comparison between "closed" and "open" societies as if there were no other differences between countries. Or as if you could take a society as different and outright weird compared to the modern era as, say, republican Rome... and easily represent it as "closed" or "open." Or as if this "closed society/open society" discussion hasn't been invoked repeatedly by historians throughout the mid- and late 20th centuries, and is somehow unique to Robinson.

I forgot this:

I mean, I could answer "Spain was technologically backward in the late 18th century due to a mix of causes, France was bankrupted by the monarchy and then wracked by repeated civil and foreign wars, and Prussia was a militarized state without the wealth of pre-existing infrastructure and trade opportunities enjoyed by the British."

At the time of the french revolution, the industrial revolution in England already has progressed quite far. When Napopeon blocked imports from England to continental Europe, factories were founded e.g. in Prussia, e.g. for cloth fabrication. After the import ban, most of them went out of business again because they couldn't compete with England-made products.

Note that a number of the causes I speak of are explicitly referencing the late 18th century. For example, France and Prussia (among others) fought a very intense land war between 1754 and 1763, which resulted in considerable economic damage in Germany. This was a factor before the French Revolution and before Napoleon.

Combine that with the fact that most of Germany remained politically divided until 1870, and it takes very little else to explain why Germany did not become a viable industrial competitor against Britain until the 1880s or 1890s.

France, likewise, had multiple rounds of bloody revolution and war between the late 1780s and the 1810s, including heavy military casualties and multiple rounds of invasions. Its sea trade had been repeatedly cut off and strangled not just during that war but during multiple previous naval wars between it and Britain, with the result that while metropolitan France was large and prosperous, the French overseas empire was tiny by comparison.

Freedom from pillaging and random destruction is a very important factor in determining a state's ability to play a leading role in economic growth. This is especially true when development aid is not going to be available.

Spain, on the other hand, had never been an industrial powerhouse; its prominence in European affairs in the 1500s and 1600s was the product of its excellent soldiers (part of a warrior-class that evolved in medieval times), and the ability of those soldiers to secure large supplies of gold and silver in the New World which made Spain artificially wealthy

So I think one has to look at the end of the 17th century/ beginning of the 18th century, where the industrial revolution started.

France was trying its state-controlled 'mercantilism' at this time. Prussia was an army backed by an agricultural country.

If we go back to the early 1700s we are in decidedly pre-industrial times. We're also far enough back that Prussia consisted entirely of what was, geopolitically, mostly a territory carved out of Eastern Europe and in particular Poland-Lithuania. At which point it is hardly surprising, in historical context, that they would be "an army backed by an agricultural country;" the same could be said of Czarist Russia with reasonable accuracy up through the 19th century.

Spain was a backwater because its kings lived from the gold and silver of South America for centuries, thereby neglecting internal advancements in Spain itself.

Spain had no comparative advantage in any particular field of economic growth; arguably this is a counterexample to the entire notion of comparative advantage because it shows what happens if you do nothing but cultivate the thing you do best while the world evolves and changes around you.

England already was much more advanced during this time, expecially regarding the predictability of legal decisions and the high level of investment security. This development started with the Magna Charta in 1215.

So how do you account for the fact that the Dutch didn't become a dominant power in continental Europe? They were about as major a commercial powerhouse as England in the 1600s, but the 1700s saw their influence wane. What did they do 'wrong' if we assume that everything hinges on whether a society is economically open or closed?

Robinson calls this 'inclusiveness', and it seems sound to me.

Calling it 'inclusiveness' is absurd. Now, it's not fundamentally wrong as such to say that a predictable legal code and a strong mercantile class are good for a society's economic growth- but this is hardly a new idea. Nor is it an idea unique to Robinson.

But he went way overboard in applying this to ancient Rome, China and whatnot.

Well that's the thing.

If all Robinson says is that Britain's industrial development from 1750 to 18?? was aided by certain legal and economic institutions, then he's not wrong... But he's also not saying anything people haven't said before, repeatedly, and probably better than he has.

When he tries to generalize this theory, though, it becomes a bad joke.

Which suggests that Robinson isn't really telling us anything of note.

[PainRack]

I like to point out that England and the industrial revolution mention is approximately 1/3 of one chapter,with other mentions being China and other countries.

Hell, it actually builds upon points developed during the comparison of north and south Korea. And it's based on the argument that South Korea was advanced because it's democratic....

Maybe there were gross simplification along the lines but it's still unconvincing as a tome.

Furthermore, Thanas point about inclusiveness deserves a mention. England as an economically inclusive society isn't dramatically convincing, given elizabethian era of societal division, which became more rigid in Victorian eras.

And that's kinda important, because Daaron argument is that it's the economically inclusive part that's drives success.

[BabelHuber]

If all Robinson says is that Britain's industrial development from 1750 to 18?? was aided by certain legal and economic institutions, then he's not wrong... But he's also not saying anything people haven't said before, repeatedly, and probably better than he has.

When he tries to generalize this theory, though, it becomes a bad joke.

Which suggests that Robinson isn't really telling us anything of note.

Now you have talked me into a corner I hardly can escape

When viewed this way, stating that countries with a higher predictability of legal decisions and a higher level of investment security fare better than countries with worse conditions is, well, just a platitude which does not help much in understanding history as a whole.

But at least I have learned something

[Simon_Jester]

Well, it's an important component of a larger whole, we shouldn't just ignore it. It helps to explain a number of things. Such as why brilliantly successful conquerors like Alexander so often failed to create a lasting direct impact in the form of a great empire that stood the test of time.

Sure, they could subdue everyone in the area, but they couldn't singlehandedly create institutions that would make it practical to govern such a large group of people, and protect them from random external forces and internal economic crises.

By contrast, the great 'lawgivers' who, within an existing society and framework, build the appropriate institutions tend to play a much larger role in establishing their countries and making them successful.

[Also it was me who said that, not PainRack. ]
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The really valuable lesson to be learned here are:

1) Societies are too complicated to be modeled on a "freedom/tyranny" axis. Either we need a multi-axis model, or "freedom/tyranny" is actually a subset of some other axis, or both.

2) Measures that make sense in terms of evaluating modern economies (such as GDP or 'degree of economic freedom') may not mean anything in the context of a different social structure where the levers of power work differently.

[BabelHuber]

[Also it was me who said that, not PainRack. ]

Mea culpa

[Thanas]

Example: During the German reunification in 1989/1990, the West German government came up with a plan to boost the economy in the former GDR. This was a typical Keynesian plan - boosting the economy by simply pumping money into it (the plan actually was more complex, but this is what it boils down).

No it does not boil down to that. When did you study German reunification and what are your sources for it?

Well, it did not turn out as expected - unemployment levels skyrocketed and the East German economy didn't quickly recover from the turmoil the reunification caused.

The East German economy did not recover because it was bankrupt. That is it. We know from internal GDR documents that the economy would have crashed in 1993 at the latest. Heck, they were already deferring infrastructure upkeep well in the early 80s. They were so desperate for cash that they even wove all the uniforms for the West German military.

Because of this, you are acting in a frivolous way by demanding that someone invent out of whole cloth a new theory of their own. And doing it with a blatant non sequitur: "Since Robinson obviously is [wrong], it should be easy for you to [invent a new theory that explains everything Robinson claims to explain, only better."

Yes, this would be stupid. But I don't expect a completely new theory for this, an already-existing competing theory which 'fits better' would be enough.

I remember at least five different models during the one course I took about 19th century industrialization that tried to explain it. So if you read up on it it should be no problem....

There are a LOT of explanations, more than anyone can easily count, for why the UK was uniquely placed to have an industrial upsurge in the late 18th and early 19th centuries. Among its advantages, off the top of my head and in no particular order:

*snip*

Let us not forget the most important thing - the ability to extract a large number of resources and wealth from India and China. Honestly, India was so thoroughly pillaged by the brits that it had the same industrial output in 1940 than it did in the 1600s, despite much better tech and infrastructure. The ability to draw upon an uncontested market for your products while getting the wealth produced by that market essentially for free is such an important competitive advantage it beggars belief.

[BabelHuber]

The East German economy did not recover because it was bankrupt. That is it. We know from internal GDR documents that the economy would have crashed in 1993 at the latest. Heck, they were already deferring infrastructure upkeep well in the early 80s. They were so desperate for cash that they even wove all the uniforms for the West German military.

Yes it was, you are right. But IIRC this was not widely known in 1989/1990. It became clear afterwards - at least to most people

No it does not boil down to that. When did you study German reunification and what are your sources for it?

I did not exactly study this. In 1989 I was a young (West) German, following the news.

But I remember the concept of the government of chancellor Helmut Kohl in 1989/1990:

- Exchange rates for East-Mark to DM were quite favourable, starting at a 1:1 exchange rate and reaching down to 3:1 for bigger amounts of money IIRC. This was much more than the East-Marks were worth back then. IIRC on the free market in 1989 it was closer to 10:1.

- Retired persons in East Germany got the same retirement pensions than people in West Germany (for similar jobs). This put stress to the system, but ensured a constant flow of money to former East German regions.

- Huge infrastructure projects like renewing streets, telephone land lines, refurbishment of residential areas etc. (I own an apartment in East Germany and I can tell you first hand that the surrounding area looks much more modern than any area in the former West Germany I have lived in)

- Subsidies were payed to keep "industrial cores" ("Industrielle Kerne" in German), like some chemical factories, oil industry, automotive plants etc. These "industrial cores" would mostly have vanished without these subsidies.
Additionally, areas where the East German companies went bancrupt were cleaned up completely, sometimes even reworked to recreation areas.

- Lots of new industrial areas were founded, including infrastructure like wastewater treatment plants, power supply lines etc. Later it turned out that this money was wasted more often than not - some of the wannabe-industrial areas never attracted any industry at all! Sometimes this was even forcing communities to completely close their newly-built wastewater treatment plant because it was not needed at all or way too expensive.

- Former state-owned real estate was sold. The buyers got big subsidies for renovating them (which kept craftsmen busy)

- A new government agency was founded (called the "Treuhandanstalt für den Wiederaufbau" IIRC). It took over the former state-owned corporations and tried to sell them. Unfortunaltely it turned out that most of them were worthless and hence went bancrupt.

Except of the last point, all of these measures helped to pump money to the former East German regions, in a typical Keynesian fashion.

Of course a few years later it turned out that the boost was not sustainable - as soon as the big infrastructure projects were finished and hence all the craftsmen involved had to find new projects, the ugly thruth raised its head.

[Thanas]

Yes it was, you are right. But IIRC this was not widely known in 1989/1990. It became clear afterwards - at least to most people

IIRC the BND got that info one month before the reunification talks, which is why Kohl was able to press for total annexation. There was a Spiegel story about this....

As for the other stuff, you are right about it, but I wouldn't call it a failure. After all, it preserved a certain standard of life in the East and prevented another great depression.

[BabelHuber]

As for the other stuff, you are right about it, but I wouldn't call it a failure. After all, it preserved a certain standard of life in the East and prevented another great depression.

I'd say the German reunification is a great example of contradicting political and economical necessities, which caused a dilemma:

From a pure economical point of view, the reunification was handled wrong: In theory it would have been much more successfull to do it 'slowly':

This means keeping two separate countries for a few years, with their own currency. Then it would have been possible to slowly lift the East German economy to western standards without almost completely destroying it.
After this would have been achieved, the political reunification could have been executed.

But politically, this was impossible: The East German population did want the reunification and the DM ASAP. They wanted to drive the same cars as the West, buy the same products, have a telephone in every household and visit western countries in their holidays. They had no interest in a slow conversion to western standards.

On top of this, each East German citicen was also a West German citicen by definition. There was no possibility to force people to stay in East Germany until it makes economically sense to reunify, and I think it would also have been politically impossible to change the laws in West Germany accordingly.

Also there was the fear that there is only a small window of opportunity you better don't miss.

So from a political point of view, the Kohl-administration did what it had to do. I do not see an alternative approach which is realistic.

[Simon_Jester]

Thing is, the German reunification worked and Germany is now a booming economic success story.

But, you tell me, modern economic theory says that reunification was somehow done 'wrong.'*

That is not an argument against Kohl's handling of reunification. That is an argument against modern economic theory.
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*For the sake of argument, I assume you represent modern economic theory correctly.

[Ziggy Stardust]

Thing is, the German reunification worked and Germany is now a booming economic success story.

But, you tell me, modern economic theory says that reunification was somehow done 'wrong.'*

That is not an argument against Kohl's handling of reunification. That is an argument against modern economic theory.
____________________________

*For the sake of argument, I assume you represent modern economic theory correctly.

I don't know about modern economic theory, but I read a book about the German reunification. Thanas may correct some of the finer details, but I think I can recount the broad facts accurately.

In the first year or two after reunification, there was a huge boom in West Germany and concomitant collapse in East Germany. The boom in the West being driven by the opening of a new market and labor force. The Bundesbank, worried about inflation and deficits resulting from government expenditures in the East, raised interest rates to stabilize the economy. There was rampant unemployment and an economic recession that last about a year or two before the economy fully stabilized, and we know what the economy was like now. In short, the economic effects of the sudden reunification were fairly minor and handled pretty swiftly.

That said, there are some concerns that the recovery of the economy has primarily benefited the former West Germany, with large parts of East Germany still in a depressed state.

[Thanas]

You are correct.

I would add that it still cost a lot of money though. At least two thirds, if not all, of our current government debt is the amount we pumped into eastern Germany. And there was a huge brain drain from the east to the west (still ongoing) which leads to some states being famous for being composed of old ex-commies and/or nazis.

[BabelHuber]

Thing is, the German reunification worked and Germany is now a booming economic success story.

In general, yes, you are correct.

However, in most East German regions unemployment is higher than in most West German regions. Of course you also have regions which do comparitively well, like Dresden and Leipzig and its surroundings.

Also you have some regions in East Germany which are sort of 'dying': Due to the de-industrialization after the reunification, lots of young people there went away, leaving back the older population and the unemployed. The population there is shrinking, and if the trend continues we could have ghost towns there in a few decades.

But, you tell me, modern economic theory says that reunification was somehow done 'wrong.'

'Wrong' compared to an ideal approach which exists only in theory, yes.

Actually, you do not need to have studied economics to see this: The East German economy was a state-controlled one, so the companies were organized completely different from what we are used to today. For such companies, the conversion to Western standards during a short time frame was a huge endeavour, and most failed.

Let's have a look at the timeline:
- November 9th 1989: Fall of the Berlin wall
- July 1st 1990: The DM was replacing the East-Mark in East Germany
- October 3rd 1990: Reunification

This gave them just ~8 month time for adjustment to a completely new business environment.

So on July 1st 1990, the Western companies entered the East German regions with full force. They had huge advantages over the former state-controlled companies regarding marketing, sales, internal efficency, production, Supply Chain Management etc.
On top of it, most East German citicens were eager to try out the 'new' western products they couldn't have before. They wanted to drink Coca Cola and smoke Marlboro instead of consuming the boring products they were used to.

So over night, lots of supermarkets and stores in East Germany were converted to a mostly western product line. Companies which produced products were suddenly not able to compete with their more efficient Western competition in a hard-currency-environment.
Others went from partners of Western corporations to competitors overnight - without seeing the writing on the wall before. They were surprised when this happened, and before they could muster a defense they were driven out of the market. Others could barely survive, but were then bought for cheap by their Western competition just to close them down.

Of course some did manage to survive, but this was rather the exception than the rule.

Compare this with a slower approach: Let's just say we introduce the DM in the former GDR on July 1st, 1995. This would give the companies 5 additional years to convert to Western standards. Of course still lots of them would go bancrupt, but they would at least have a fair chance to convert theselves.

That is not an argument against Kohl's handling of reunification. That is an argument against modern economic theory.

You are correct. As I already have stated, I see no realistic alternative for Kohl's actions back then once you factor in the political situation at that time.

[Simon_Jester]

In general, yes, you are correct.

However, in most East German regions unemployment is higher than in most West German regions. Of course you also have regions which do comparitively well, like Dresden and Leipzig and its surroundings.

Also you have some regions in East Germany which are sort of 'dying': Due to the de-industrialization after the reunification, lots of young people there went away, leaving back the older population and the unemployed. The population there is shrinking, and if the trend continues we could have ghost towns there in a few decades.

Exactly the same thing is happening to large sectors of (for example) rural America. Economic decay and mass exodus from some regions of a country toward others is fairly common nowadays. I'm not sure this is a problem that can be fixed by any specific modifications of state policy, aside from something stupid like paying people literally to keep living in an area even when they'd prefer to move.

But, you tell me, modern economic theory says that reunification was somehow done 'wrong.'

'Wrong' compared to an ideal approach which exists only in theory, yes.[/quote]Well, yes. The point is that ignoring the theory seems to have given rise to good results... which suggests the theory itself may be fairly irrelevant.

Compare this with a slower approach: Let's just say we introduce the DM in the former GDR on July 1st, 1995. This would give the companies 5 additional years to convert to Western standards. Of course still lots of them would go bancrupt, but they would at least have a fair chance to convert theselves.

This invites the question: is 'saving' the East German companies a worthwhile goal? Not just "would doing it be unpopular," but is it even in the combined interests of all Germans to try given the opportunity costs of doing so?

That is not an argument against Kohl's handling of reunification. That is an argument against modern economic theory.

You are correct. As I already have stated, I see no realistic alternative for Kohl's actions back then once you factor in the political situation at that time.

It's not just that. It's that if modern economic theory predicts that we should do ABC, and we do XYZ instead and things turn out great, then at least informally... It suggests that the modern theory is incorrect or seriously flawed.

[BabelHuber]

The point is that ignoring the theory seems to have given rise to good results... which suggests the theory itself may be fairly irrelevant.

No, the point is that the German reunification cost more that 1 Trillion Euro (about 1.5 Trillion IIRC, but I'm not 100% sure, so let's go with the lower figure).

This amount of money was spent in a region with ~16 Million inhabitants. 1 Trillion Euro is ~€62500 per inhabitant!

Of course you can get some halfway decent results this way, but only because West Germany did have the money to spend. It is not irrelevant to point out that you could get pretty much the same result cheaper.

Of course only in theory, since we agree that in real life there was no credible alternative at this time

[LaCroix]

This amount of money was spent in a region with ~16 Million inhabitants. 1 Trillion Euro is ~€62500 per inhabitant!

That means it has cost about 2-3 annual average wages per person to lift 16 million people and their country from a completely failed economy up into a leading first world economy. This amount does not seem excessive to me.

[Thanas]

Especially considering the sums being spent on Greece right now.

EDIT:
That being said, IMO it is worthwhile to look for an ideal case scenario as it provides a benchmark and you can then go look at what is economically feasible.

But I do not agree that keeping East Germany protected for another five years would have done anything. How would the companies over there get cash if they were all either bankrupt (= state owned) to modernize? So modernization would have to be largely done by the state. Good luck with that and good luck convincing western taxpayers that this money would not simply be wasted or used to take their jobs to the east.

[Simon_Jester]

The point is that ignoring the theory seems to have given rise to good results... which suggests the theory itself may be fairly irrelevant.

No, the point is that the German reunification cost more that 1 Trillion Euro (about 1.5 Trillion IIRC, but I'm not 100% sure, so let's go with the lower figure).

This amount of money was spent in a region with ~16 Million inhabitants. 1 Trillion Euro is ~€62500 per inhabitant!

Of course you can get some halfway decent results this way, but only because West Germany did have the money to spend. It is not irrelevant to point out that you could get pretty much the same result cheaper.

Of course only in theory, since we agree that in real life there was no credible alternative at this time

Well, the problem is that while the theory asserts that a better result could be gotten for less money, there is no reason to assume this is true and many reasons to assume it isn't.

The heart of the problem with many existing economic models is that they assume humans are ideal frictionless spheres in a vacuum, so to speak: that they will behave in simple, predictable ways. The problem is that while this works in physics (where a given atom has only so many options and ways in which it can move or act), it works poorly in social sciences. Humans routinely invent entirely new categories of methods and institutions to avoid dealing with an undesirable problem. And when confronted with a situation where the 'rules' are unfavorable they will outright break or at least amend the rules accordingly.

It's hard to mathematically model a system where the objects of study are capable of rewriting the basic rules that define how they interact.
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So basically, you construct an economic model that predicts that if ABC is done in the case of reunifying Germany, then XYZ will happen. The problem is, if policies ABC are actually put into action, people start doing weird stuff like moving out of the country rather than staying around and continuing to work in the economic regime you've created for them.

You can dismiss that as saying "the logical course of action was politically impossible." Trouble is, your theory predicts that action ABC will have consequence XYZ. And XYZ doesn't happen because humans don't play along with the theory. In that case, the theory which predicts XYZ is wrong. Just as it would be wrong to predict that planets travel around the sun in square orbits.

[BabelHuber]

The heart of the problem with many existing economic models is that they assume humans are ideal frictionless spheres in a vacuum, so to speak: that they will behave in simple, predictable ways. The problem is that while this works in physics (where a given atom has only so many options and ways in which it can move or act), it works poorly in social sciences. Humans routinely invent entirely new categories of methods and institutions to avoid dealing with an undesirable problem. And when confronted with a situation where the 'rules' are unfavorable they will outright break or at least amend the rules accordingly.

It's hard to mathematically model a system where the objects of study are capable of rewriting the basic rules that define how they interact.

Yes, basically we agree that there was no way of doing it much differently in real life.

But regarding the 'theory', you are thinking too complicated: The economy of the GDR collapsed because two of two events which occured at the very same time:

- The conversion from a state-directed economy to a free market economy
- The conversion from a weak currency to a strong currency

This the economy of the GDR couldn't handle, as reality proved.

First privatizing the companies of the ex-GDR in a weak-currency-environment and afterwards switching to a strong currency - when things have settled down - would have been 'better' when you purely look at macroeconomics and microeceonomics.

IIRC this is exactly what some economists recommended in 1989/1990. Of course this was a completely unrealistic approach because of all the reasons which have been already stated.
I even think that this approach - would it have been tried out - would have delivered even worse results in real life.

But these political side-effects are not part of macroeconomics and microeceonomics, so you always have to take these theories with a grain of salt.

[Simon_Jester]

Well yes; "take with a grain of salt" lines up closely with my basic point, which is that the theory doesn't hold up well in actual practice. It's pointless to promulgate a theory that explicitly prescribes ABC, and predicts consequences XYZ, when doing ABC gives rise to consequences not-XYZ during field tests.

[Adam Reynolds]

This is slightly off topic from the economic discussions, but I vaguely remember hearing from someone who grew up in East Germany around the time of reunification that when the West German school standards took effect that school actually became easier. Is it true that East Germany actually had better grade schools? I would obviously assume that West Germany had better universities.

[Thanas]

This is slightly off topic from the economic discussions, but I vaguely remember hearing from someone who grew up in East Germany around the time of reunification that when the West German school standards took effect that school actually became easier. Is it true that East Germany actually had better grade schools? I would obviously assume that West Germany had better universities.

In some subjects, like hard science, the east arguably had a stronger emphasis and put much more work on the students. There was also a lot more focus on discipline. Whether that makes the schools better is up for debate - do you think a military academy is inherently superior to a normal school? (not the same but same principle of comparison)

It should also be noted that the east had some of the best engineer schools, they just got shafted with the soviet disregard for patents, so nothing they invented ever got protected. Despite it being some good stuff we use today like the 2cylinder motorbike motor.

[cmdrjones]

You are correct.

I would add that it still cost a lot of money though. At least two thirds, if not all, of our current government debt is the amount we pumped into eastern Germany. And there was a huge brain drain from the east to the west (still ongoing) which leads to some states being famous for being composed of old ex-commies and/or nazis.

this sounds a lot like Detroit. You have areas where there are nobody working or with economic power except for retirees from either the big 3 or government, city, state or county...

[cmdrjones]

I think another part of the problems with theories like this is that people have a tendency to only look at the massively successful historical societies (e.g. Rome, China, et al) on the one hand OR the ones that underwent massive collapses (e.g. the Mayans), without also examining the multitude of sometimes poorly documented or studied societies that never "prospered" or "failed" in magnificent fashion. You never hear people talk about, say, the Sabaeans, who quietly flourished as a trading state in southern Arabia for the better part of a millenium; or the Pagan Kingdom in modern day Burma, that slowly collapsed as a result of Mongol invasions and repeated civil wars.

If you really want to test one of these theories, you have to see how well it fits all of these cultures, not just cherry-picked examples like Rome and China. Did the Pagans fall due to their economic structure undermining central political rule or due to geography or what?

I agree. I do raise one point though: The use (or overuse) of Rome or China I think, is due to them being THE economic and political colossi (colosses?) of their day, and we seek some past mirror of ourselves and they present the most "standout" examples. SO, i guess it's just selection bias.
Though for a boiled down and admittedly simplistic answer: The Gods of the Copybook Headings by Kipling

Even in cases where the "old ways" no longer apply, (native americans meeting europeans for example, or the mayans or greenlanders facing climatic changes) I think a large part of the more spectacular collapses in history can be attributed to people simply taking more out of the systems than their ancestors put in.