The New Wealth of Nations is a book about the decline of world poverty by Indian economist Surjit S. Bhalla. The book explores the role of education in bringing this about, the failures of current measures of inequality, and possible changes to government welfare programs to accommodate changing conditions.

The opening chapter considers the accelerated growth of the third world relative to advanced economies in recent decades. Bhalla posits greater equality in education as the cause, making the case through much of the rest of the book. His near-obsession with equality between the sexes and belief in its unalloyed goodness begins here and becomes tedious as the book goes on. His list of supposed benefits of the globalization demonstrate a thoroughly liberal worldview. Bhalla closes the chapter by introducing the topics that will be covered in most of the following chapters.

Chapter 2 deals with the impacts of the equalizing of education around the world. Bhalla cites data showing that since 1980, growth in developing countries has outpaced growth in the West. He notes that crediting globalization for all of the 700 percent growth in the incomes of poor people in China and India would be fallacious, but waits until the next chapter to deal with other explanations. He views Brexit and Trump as mostly a backlash against falling Western growth, partly racially motivated, and the latter partly due to Clinton’s incompetence as a candidate, which is more or less correct. Bhalla ends the chapter by framing globalization as good in Rawlsian terms, which also works against his case if one rejects Rawls’ conception of government policy ethics.

The third chapter examines economic history from 1500 to 2016, with projections to 2030. Bhalla relies heavily on the estimates of Angus Maddison, which are highly questionable even by Maddison’s own admission.[1,2] Bhalla outlines his methodology for the rest of the book, and problems here explain most of what is misguided going forward. He makes much of the Gini coefficient, which has its own set of faults. He contemplates why poor countries are poor, looking to industrialization, commodity trading, and colonialism, finally settling on lack of education. Never does the possibility of genetic differences in intelligence between ethnic groups cross Bhalla’s mind, as this would call into question his “natural experiment” of comparing Latin America to Africa and Asia in the 19th and early 20th centuries. The chapter finishes on a tangent about spread of democracy, which Bhalla treats as political freedom and an absolute good rather than a source of perverse incentives.

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References:

  1. Datta, Saugato, ed. (2011) Economics: making sense of the Modern Economy. John Wiley & Sons.
  2. Maddison, Angus (2007). Contours of the world economy 1-2030 AD: Essays in macro-economic history. Oxford University Press.
  3. Fritze, Ronald H. (2011). Invented Knowledge: False History, Fake Science and Pseudo-religions (Reprint ed.). Reaktion Books. p. 12, 19.
  4. Wai, Jonathan; Cacchio, Megan; Putallaz, Martha; Makel, Matthew C. (2010). “Sex differences in the right tail of cognitive abilities: A 30year examination”. Intelligence. 38 (4): 412–423.