One of the major problems with ecomyths is that most people do not have a good understanding of economics. Many ideological environmentalists dismiss economics and are derisive about its role in global development. For many, free-market economies are the source of destruction and consumerism is the pinnacle of evil -isms (along with corporatism, Americanism and capitalism).
Much of this intellectual disdain stems from a fundamental lack of understanding of real economics: why some countries prosper while others don't and what interventions can assist people who want to overcome poverty and what actions actually end up exacerbating the very problems they are intended to alleviate. Perhaps the best example is the celebrity pronouncements on development, especially Africa, by people who are clearly produces of an increasingly flawed educational system wherein...the curriculum is regarded as a vehicle for promoting political objectives and for changing the values, attitudes and sensibilities of children.
Against this backdrop, Arnold Kling presents the first in a series of essays that discuss the ideas of the economist Douglass North. One of North's most important contributions is his recognition of the source of wealth in today's globalized economy:
- ...North and his adherents have an explanation for the enormous variation across countries in intangible capital. North focuses on institutions, including property rights, the behaviour of government officials, and trading methods. Where these institutions serve to reward work, innovation, and risk-taking, the residual is positive. Where these institutions serve to reward theft and expropriation, the residual is negative. When government will expropriate any wealth that people create, the present value of future output can actually be less than the value of the country's tangible resources. The power of predatory government to destroy wealth is truly awesome.
So in today's world, economics is not abstract. Economics must be contextualized and understood primarily in terms of the institutional arrangements that structure, guide and influence the conduct of companies and consumers, market behaviour and the role of governance. Moreover, economics cannot and should not be glibly dismissed using set ideological phrases plagiarized from Marx: the conditions faced by the working class in 1829 England are not those faced by emerging economies in today's third world.
Of course understanding this does mean reading some economics by economists who think: hence Kling's discussion of North and the efforts of economists such as Daniel Ben-Ami and Johan Norberg , and sites such as Cafe Hayek and the Globalisation Institute.
Me, promoting economics: who would have believed it.
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