Now for some good news.
Michael Mandelbaum's new book, The Road to Global Prosperity, points out something that may seem obvious but is nonetheless important and underappreciated. As he puts it:
No method of organizing economic life on the planet other than internationally integrated free markets commands anything like the political support necessary to displace the current system. No collection of rules, institutions, and practices that is new, different, and promising is available. The alternative to the current global economic order is…nothing.
That was the good news.
The book goes on to examine a range of potential threats to prosperity.Many of them are political.
There's the risk of what Professor Mandelbaum calls Wilhelmine China, the chance that a rising China might enter conflict with the United States the way that Germany under Kaiser Wilhelm did with Great Britain. China, he writes, "needs better-defined and more secure property rights."
There's the risk of corruption in Russia, where one think tank estimated that in 2005 "bribes accounted for fully 20 percent of the country's GDP," rising from "$33 billion when Putin came to power to more than $400 billion at the end of his second presidential term in 2008."
Professor Mandelbaum, who teaches at the Johns Hopkins School of Advanced International Studies, has a particularly acute understanding of immigration. He appreciates its growth effects — a rough estimate is that "lifting all restrictions on immigration worldwide" could double global economic output. He also grasps the way the politics of immigration split elites from the rest of society. He gives the example of a book by a German central bank governor, Thilo Sarrazin, who argued for immigration restrictions. It sold more than a million copies in a few months, but also got Sarrazin fired. (The immigration section is also the place for the one factual error I caught in the book, Professor Mandelbaum's claim that help-wanted ads in East Coast cities in the late 19th and early 20th centuries commonly included the words "No Irish need apply." That myth is debunked here.)
The book is enlivened by Professor Mandelbaum's prose and by his eye for a useful metaphor. "Dealing with the debt crisis by forging a pan-European political union," he writes, "resembles revising the fire code while the building is burning: worthy and constructive, no doubt, but not an answer to the immediate problem."
The book concludes with another metaphor, predicting that the global economy "will not come to a halt, veer sharply off the road, or hurtle into a fatal collision." Instead the ride will continue — "bumpy," but on an "upward path," largely because "there is no attractive alternative to free markets."
It's true that central planning or protectionism are not attractive alternatives and do not work as well as a free market. They nonetheless manage to prove seductive, especially to the central planners, or would-be central planners, themselves, who can do a lot of damage on the way to demonstrating that their approach is not an attractive alternative. Those are some of the bumps on the road to global prosperity. Professor Mandelbaum predicts that the economic shocks in the years ahead will "happily, fall far short" of the damages of World Wars I and II, of the Great Depression, and even of the 2008 economic crisis. Let's hope he's right.