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IPFS News Link • Economic Theory

What Will You Do in the Approaching Third World?

•, By Bretigne Shaffer

There's a very interesting interview with Ed Dowd (thanks to Celia Farber for the tip), in which Ed discusses, among other things, his view (starting around 56:00) that the American economy is headed into a period that will in many ways resemble third-world economies.

It's bold statement, but I don't think he's wrong. No, I don't think (and I don't think he thinks) that we will hit sub-Saharan-African levels of poverty in the near future. But I do believe we are about to experience levels of routine dysfunction to which very few of us are accustomed. This has already started, and Dowd gives some examples. I can think of examples from my own life – from staffing shortages in restaurants and hospitals, to difficulty finding replacement parts for equipment and building materials.

I imagine that when most people think "third world", they think poverty and desperation. I think opportunity. But that's because I've spent time in the third world, and I've seen what people are capable of creating when they have even the most fundamental levels of systemic infrastructure in the form of some property-rights protection and some degree of a hands-off policy on the part of the government.

The countries I was most familiar with (China and Vietnam) were communist in name, but were implementing free-market reforms in the hope of lifting the people who lived there out of excruciating poverty. I imagine a lively debate could be had today, on the question of which country had more of a genuine free market: China in the 1990s, or the US during the same period. I think it would be very hard to argue that America of the 2020s is more economically liberal than 1990s' China.