Is it too soon to be asking in what part of the world will the next golden age be located?

 

The question posed above occurred to me as I was reading the final pages of Johan Norberg’s latest book, Peak Human: What We Can Learn from the Rise and Fall of Golden Ages.

Johan Norberg is a senior fellow at the Cato institute. He is a historian of ideas and a prolific author. If Norberg has a fan club, I might qualify for honorary membership. I have written about some of his previous books on this blog (here and here) and have read others.

Norberg explains what he means by a golden age in these terms:

“A golden age is associated with a culture of optimism, which encourages people to explore new knowledge, experiment with new methods and technologies, and exchange the results with others. Its characteristics are cultural creativity, scientific discoveries, technological achievements and economic growth that stand out compared with what came before and after it, and compared with other contemporary cultures. Its result is a high average standard of living, which is usually the envy of others, often also of their heirs.”

The author suggests that the most important precondition for a golden age is “an absence of orthodoxies imposed form the top about what to believe, think and say, how to live and what to do.” He doesn’t present the golden ages he has identified in utopian terms. He acknowledges that countries concerned all practiced slavery, denied women basic rights and “took great delight in exterminating neighbouring populations”.

As implied in the epigraph, Norberg argues that civilizations decline when they lose cultural self-confidence. He suggests that episodes of creativity and growth are often terminated because of the perceived self-interest of people who fear change and feel threatened by it. Free speech is replaced by orthodoxies and free markets are replaced by increased economic controls. The fears of those seeking stability and predictability often become self-fulfilling.

 In my view, Norberg has done an excellent job in explaining why golden ages have emerged and disappeared at different times in different parts of the world.

However, I think there may be an omission in the author’s identification of golden ages. I will briefly discuss that before focusing on the question of whether the Anglosphere is in decline.

Identifying golden ages

Norberg discusses seven golden ages in his book. Since he doesn’t provide a summary timeline showing their duration, I asked ChatGPT to construct the following:

• Athens: 480–404 BC
• Rome: 27 BC–AD 180
• Abbasids: 750–950
• Song dynasty: 960–1279
• Renaissance Italy: 1490–1527
• Dutch Republic: 1609–1672
• Anglosphere: c. 1688 onward.

If that timeline is broadly correct, it suggests that the largest gap between golden ages occurred between the end of the golden age of Rome and the beginning of the golden age of the Abbasids. What was happening at that time? Although the golden age of Rome may have ended around 180, following the death of Marcus Aurelius, the decline and fall of the Roman empire took a few more centuries. The last emperor of the Western Roman empire was deposed in 476. Plato’s Academy in Athens apparently continued to function until 532, when the seven last philosophers left to seek refuge with the Persian king. Interest in Greek philosophy grew in Persia during the 6^th and 7^th centuries, partly because of the presence of scholars associated with schismatic Christian sects.

As I was pondering what was happening between 180 and 750, I began to wonder whether India’s golden age might have been worth discussing in this book. While visiting India last year I read William Dalrymple’s book, TheGolden Road: How Ancient India Transformed the World. As well as discussing India’s impact on religion and culture throughout much of Asia, Dalrymple. points out that over the period from about 250BC to AD 1200, India was an important centre of commerce and trade, and an innovator in fields such as astronomy and mathematics.

India was the source of the numerical system with 10 digits including zero, that we use today. Norberg mentions that important contribution, but Dalrymple discusses it at greater length.

Another fascinating topic discussed by Dalrymple is the close relationship between the merchant classes of early India and the Buddhist monastic movement. Dalrymple emphasizes the importance of trade between India and the Roman empire. He notes that as the Roman empire crumbled, India’s trade with Europe was replaced by expansion of its trade with south-east Asia.

Is the Anglosphere in decline?

The Anglosphere refers to those nations where the English language and cultural values are dominant. Few would dispute that over the last couple of centuries the Anglosphere, first led by Britain and then the United States, played a leading role among nations in demonstrating the benefits of liberal democracy, free markets, technological innovation, and free international trade. Life in the Anglosphere has been far from ideal even in respect of those criteria, but there can be no doubt that we have been living in an age of widespread prosperity that is without historical precedent. As Norberg points out, the whole world has benefited from the spread of golden-age conditions fostered by the Anglosphere, with global extreme poverty declining from 38 to 9 percent in just the period since 1990.

However, Norberg notes that “many ominous signs of decline are clearly present in our time”. He mentions the “hubristic overreach” of U.S. attempts to reshape the Middle East through military interventions in Afghanistan and Iraq, the financial crash of 2008, and the growth of “crippling public debt”. He suggests that a series of crises, including the Covid pandemic, have fostered “a sense that the world is dangerous and that we need to protect ourselves from it”. He writes:

“Most worryingly, rich counties have experienced a major backlash against globalization and trade, and immigrants have become scapegoats, just as they were in so many other eras of decline, potentially shutting us out from our most potent source of constant revitalization.”

Norberg notes that both China and Russia “have recently taken a totalitarian turn and are working hard to devastate neighbours”. He suggests, nevertheless, that Russia and China will have a hard time trying to challenge the Anglosphere-led world order because it will be difficult for them to find reliable friends among advanced states. 

Unfortunately, in the short time since the book was written, the government of the United States has adopted an international stance that seems to be inconsistent with the continued existence of an Anglosphere-led world order. Countries that have long regarded themselves as allies of the U.S. are now forced to contemplate seriously how they can best protect their own interests if the U.S. pursues isolationist policies.

The book ends on a somewhat optimistic note. The author observes that there are roughly fifty prosperous, open societies around the world. If one of them fails, “that will not stop others from picking up the torch”. He adds:

“That prompts the question of where the next golden age will come from.”

After considering various possibilities, however, he suggests that “perhaps this is the wrong way to look at it because we now have a “truly global civilization” in which every literate person anywhere in the world can draw upon the accumulated knowledge of humanity and learn skills in any field. In that context, “no one country can hold a monopoly on the ideas that can make them prosper”.

I agree with the general thrust of that argument. The technology required for future golden ages is not deposited in a library that can be easily destroyed. However, the geographical location of societies that are open and prosperous is still an issue worth considering. It isn’t much consolation for citizens in the United States, Britain or Australia to know that their children and grandchildren may be able to draw upon the accumulated knowledge of humanity and learn skills in any field, if institutional change impinges adversely on their incentives to do such things. Opportunities for human flourishing depend on whether political entrepreneurs will restore and maintain sufficient economic freedom.

It is in that context that I ask: Is it too soon to be asking where the next golden age will be located?

I suggested an optimistic answer to that question in Chapter 6 of Freedom, Progress, and Human Flourishing. Looking beyond looming economic crises, I am still optimistic that the governments of most liberal democracies will eventually introduce institutional reforms to enable the drivers of progress to restore growth of opportunities.

What does the Milgram experiment tell us about human nature?

 

I can remember feeling shocked when I first heard about the Milgram experiment. Some psychology students told me about the experiment about 60 years ago, while I was at university.

At that time, the findings of the experiment caused me to question my view of human nature. I was brought up to hold the view that it is natural for humans to be kind and humane. That view is consistent with the derivation of the words, “kind” and “humane”. It is also the view I hold now. The findings of the Milgram experiment seemed to suggest, however, that a less positive view of human nature might be more accurate.

In this post I will summarize the Milgram experiment briefly before explaining why I have changed my mind about what it tells us about human nature.

The experiment was conducted by Stanley Milgram, a psychologist at Yale University. His aim was to explore whether individuals would obey instructions to harm another person when an authority figure told them to do so. The first results of the experiment were published in 1963.

Participants in the experiment were led to believe that they were assisting in a learning experiment in which they were “teachers” who had to administer electric shocks to a "learner" who made mistakes. The electric “shocks” were fakes. The “learners” were actors. They made audible protests in response to the fake shocks. As the voltage increased, the “learners” protested more.

The main finding of the experiments was that a very high proportion of subjects fully obeyed the instructions - 65% were willing to apply the highest shock level. The experiment was replicated several times with similar outcomes being obtained.

When I first heard about the study, the message I took from it was that most humans are horrible. People claim to have regard for the well-being of others, but when it comes to the crunch, most people lack sufficient empathy and/or moral fortitude to refuse to inflict pain on others. The worst part of it was that I wasn’t confident that I would have been one of the minority who refused to apply the highest shock level.

However, when I recently read an article about the study I modified my view of the participants. They didn’t lack empathy for the victims. It was obvious from their behaviour, including symptoms of stress, that they were uncomfortable following the instruction to inflict pain. Every participant paused the experiment at least once to question whether they should continue. In interviews following the sessions, participants frequently described feeling tormented by what they believed they were doing.

Participants only continued because the instructor insisted that they do so. The instructor began by asking the participants politely to “please continue”. If they continued to object, they were told: “The experiment requires you to continue”. If they still objected, they were told three times that they “must continue”.

Milgram’s subsequent experiments showed that obedience was affected by a range of factors e.g. the uniform of the instructor, the location of the experiment, and the presence of social support. In one experiment, two confederates in the room refused to administer high levels of shocks. In that context, only 10% of participants were willing to administer the highest level of shock.

On the basis of his findings, Milgram suggested that the obedient participants were in an “agentic state” where they had allowed others to direct their actions and then passed off responsibility for the consequences to the person giving the orders.

Alexander Haslam and Stephen Reicher have suggested another factor that may explain the behavior of the obedient participants. Rather than simply caving in to orders, they may have believed that they were contributing to a worthy scientific cause.

My conclusion

I am no longer surprised that 65% of participants in the Milgram study ended up doing what the instructor told them to do. They had good reasons to respect the authority of the instructor. They believed they were taking part in a scientific experiment being conducted at a reputable university.

The outcome of the experiment reflected excessive respect for authority rather than a lack of empathy with other humans.

The main point I take away from the findings is that people need to recognize that if they want to behave honorably towards others, they may sometimes need to disregard instructions from authority figures.

The findings of the experiment do not provide a reason to question the view that empathy for others is a characteristic of human nature which is suppressed only under extraordinary circumstances.  

Are declining economic growth rates likely to have undesirable impacts on social attitudes?

 

Research for an earlier essay on this blog led to the conclusion that declining economic growth rates in high income countries are likely to cause an increasing proportion of the population of those countries to feel that their standard of living is worse than that of their parents at a comparable age, and therefore to experience lower average life satisfaction. In this essay I extend that analysis to consider the social attitudes of people in the USA, Britain and Australia who feel worse off than their parents.

In the previous study I used data from the World ValuesSurvey to examine the relationship between the perceptions of respondents about their standard of living relative to their parents at a comparable age and economic growth in the countries in which they reside. That data was then linked to average life satisfaction.

The main findings were:

• Perceptions of standard of living relative to parents are positively related to past economic growth experience of the countries in which people live.
• In the high-income countries, low growth has a greater adverse impact on young peoples’ perceptions of their standard of living relative to parents than on the corresponding perceptions of old people.
• The perception of having a lower standard of living than parents at a comparable age has a substantial adverse impact on life satisfaction ratings.

These findings imply that lower economic growth rates would be likely to result in an increasing proportion of the population having lower living standards than their parents, and hence, lower average life satisfaction. The psychic costs of adjustment to lower economic growth would initially fall most heavily on young and middle-aged people.

Those findings raise questions about likely changes in social attitudes if economic growth prospects continue to decline in high-income countries, resulting in an increasing proportion of people who feel worse off than their parents were at a comparable age. This essay uses World Values Survey data to explore how some of the social attitudes of people who perceive themselves to have a lower standard of living that parents differ from those of the rest of the population.

I focus on three high-income countries – USA, Britain and Australia. The USA survey was undertaken in 2017, the British survey in 2022, and the Australian survey in 2018.

Figure 1 provides further evidence that people in the USA, Britain and Australia tend to have lower average life satisfaction if they perceive that their standard of living is lower than that of their parents.

 

Demographics

Figure 2 indicates that people who perceive themselves to be “worse off” than their parents tend to be concentrated in the 25-54 age groups.

 

Figure 3 suggests that the sex composition of those who feel “worse off” than their parents differs somewhat by age group in the countries considered, but I have no idea why. There appears to be a higher percentage of young women in that category in Australia, a higher percentage of women in the 30-49 age group in Britain and a higher percentage of older women in the United States.

 

Work and Success

Figure 4 indicates that those in the “worse off” category are less likely to agree that hard work brings a better life.

 

Attitude to Migrants and Migration

The only conclusion I can draw from Figures 5 and 6 is that Australians who feel “worse off” than their parents tend to have more negative attitudes toward migrants and immigration than those who feel better off or about the same.

 

Trust

Figure 7 suggests that a lower percentage in the "worse off" category say most people can be trusted.

Figure 8 suggests that a lower percentage of those in the "worse off" category have confidence in the justice system.

Priority given to Freedom

Figures 9 and 10 suggest that there is not much difference between the three groups in terms of priority given to freedom. Slightly fewer of those in the “worse off” category tend to give freedom higher priority than equality. Surprisingly, in Australia and Britain, slightly more of the people in that category tend to give freedom higher priority than security.

 

Government objectives

Figure 11 indicates that those in the “worse off” category are more inclined to want government to take more responsibility to ensure everyone is provided for. The percentages shown are for the top 3 ratings on a 10 point scale.

 

Figure 12 indicates that those in the “worse off” category are less inclined to give high priority to economic growth. Respondents were asked to select from a list which national aim should be given highest priority. Other items on the list include having strong defence forces and individuals having more say in decision making.

 

Politics

Figure 13 suggests that those in the “worse off” category are no more interested in politics than other people in the countries considered.

 

Figure 14 suggests that people in the “worse off” category are no more likely to consider that it is good to have a strong political leader.

 

Figure 15 suggests that people in the “worse off” category are no less likely to consider that democracy is important.

 

Figure 16 suggests that people in the “worse of” category are less likely to be satisfied with political system performance than are people in the other categories.

 

Figure 17 suggests that people in the “worse off” category are as strongly opposed to political violence as are people in the other categories.

 

Conclusions

The social attitudes of people who perceive their standard of living to be worse than that of their parents at a comparable age are similar in many respects to those of people who perceive their standard of living to be better or about the same as that of their parents.

However, there are some important differences. People who perceive their standard of living to be worse than that of their parents at a comparable age are more inclined to:

• Skepticism about hard work bringing a better life;
• Pessimism about trustworthiness of others and lack of confidence in the justice system;
• Collectivism in terms of responsibility for the wellbeing of citizens;
• Negativity about giving high priority to economic growth; and
• Dissatisfaction with political system performance.

That combination of attitudes seems likely to be self-perpetuating because it is likely to promote policy responses that will lead to lower economic growth and a further increase in the proportion of the population who perceive their standard of living to be worse than that of their parents. Adoption of more market-friendly economic policies to facilitate higher economic growth seems unlikely to occur before that course of action becomes more obviously necessary to avert major economic crises.   

Will economic freedom continue to triumph?

 

As I was reading The Triumph of Economic Freedom, the recently published book by Phil Gramm and Donald J. Boudreaux, I wondered whether its title might be too optimistic. The book certainly supports its conclusion that “freedom has been the key to the great progress we have made in the past, and it the key to our progress in the future” (p. 197). However, the impression I was left with is that the authors are not overly optimistic that economic freedom will continue to triumph in America.

The subtitle of the book is Debunking the Seven Great Myths of American Capitalism. In the introduction the authors suggest that current “conventional wisdom” about the desirability of “expanding the government’s role” (i.e. reducing economic freedom) is supported by those myths (pp. xii-xiii). The ongoing triumph of economic freedom will depend importantly on whether enough people understand its merits and are willing to defend it.

Phil Gramm and Donald Boudreaux have both been staunch defenders of economic freedom over a long period. Phil Gramm is an economist and former politician. He represented Texas in both chambers of the U.S. Congress and, at different times, served as both a Democrat and a Republican. Donald Boudreaux is an economics professor at George Mason University and a senior fellow at Mercatus Center. He has vigorously sought to make economic issues, particularly issues surrounding international trade, understandable to a broad audience. He has used his Café Hayek blog for that purpose for over 20 years.

My aim in this essay is to draw on The Triumph of Economic Freedom to consider where anti- market myths come from and who defends them.

Myth 1: The industrial revolution caused a great deal of misery.

This bleak assessment dominates conventional wisdom and popular literature to this day, yet the authors point out that it is refuted by “every major measure of material well-being”.

The myth seems to have its origins in the fact that poor people become much more visible when they move from the countryside in search of a better life in factory work in urban areas. Victorian literature, particularly the novels of Charles Dickens, paint a “worst of times” portrait at the end of the Industrial Revolution.

There has been debate among economic historians about the point at which average real wages actually began to rise in England during the 19th century (even some discussion on this blog) but there can be no doubt that the industrial revolution was the beginning of a golden age of material well-being.

Why does the myth persist? Those who wish to question the merits of free markets still see it as a useful narrative for their purposes (which may include encouraging opposition to imports from “sweatshops” in developing countries).

Myth 2: Progressive era regulation in the U.S. was necessary to meet the threat posed by corporate monopolies.

This myth seems to have had its origins in the inability of many small, local firms to withstand the competition of economic giants serving the national market. These corporate giants contributed to widespread growth of economic opportunity, but their competition was portrayed as harmful by interest groups and politicians seeking greater control of the economy.

This myth is still to be found in leading history textbooks. It is still a useful narrative for those who promote a new progressive vision for regulation of tech giants.

Myth 3: The great depression was a failure of capitalism.

Gramm and Boudreaux suggest: 

“When failed government policies produce a crisis, government blames capitalism and then uses the crisis to expand the very powers that initially caused the crisis” (p. 193).

Some prominent economists who prefer market failure explanations to government failure explanations certainly helped governments to do this. Advocates of market failure put forward some explanations of the depression that appeared to be plausible e.g. the idea that free market capitalism has a tendency toward under-consumption. Gramm and Boudreaux point out, however, that the long period of economic growth after the end of World War II, following restoration of “a largely free market”, testifies against theories of underconsumption (p. 80).

Myth 4: The myth of trade hollowing out American manufacturing.

This myth has its origins in the decline in employment in manufacturing as a percentage of total employment. As Gramm and Boudreaux point out, as part of the economic growth process, advances in technology eliminate jobs in manufacturing (as in agriculture beginning at an earlier point) and create jobs in the service sector. This process enables wages and other incomes to rise.

Import competition is blamed because nationalism is “always a powerful force than can be tapped to stoke support for protectionism, and significant benefits can be granted to a small number of economic interests, with the costs spread almost imperceptibly across society as a whole” (p. 193).

Myths about international trade persist because the roles of economic freedom and technological progress in the economic growth process are poorly understood by most citizens. Few economists support protectionist policies.

Myth 5: The myth that deregulation caused the financial crisis of 2008.

The central element of the myth is that financial deregulation enabled banks to “recklessly gamble depositors’ funds in securities markets”.  Gramm and Boudreaux point out that government “regulatory policy pressured banks to make bad loans”, “forced government-sponsored enterprises to purchase and securitize those loans”, and “manipulated financial institutions’ capital standards to encourage banks to hold massive quantities of mortgage-backed securities” (p. 193).

As with the great depression, this is another example of government causing a crisis and then creating a myth to suggest that the crisis occurred because of insufficient government regulation.

Myth 6: The myth that income inequality in America is high and rising on a secular basis.

Gramm and Boudreaux point out that this myth has its origins in reliance on official Census Bureau data which fails to count two-thirds of transfer payments. When appropriate adjustments are made to the official figures, the ratio of average household income in the top quintile to average household income in the bottom quintile falls from 16.7 to 1 to 4 to 1, and the appearance of growth of inequality disappears.

The idea that income inequality is high and rising in America is so ingrained in conventional wisdom that I had some difficulty accepting that it is a myth. However, the authors have presented a persuasive argument based largely on research by John Early, who was formerly assistant commissioner at the Bureau of Labor Statistics.

The Census Bureau apparently includes footnotes in its publications to acknowledge the limitations of its measures of household income, but it is difficult to understand why it has not produced more accurate measures.

Myth 7: The myth that poverty is a failure of American capitalism.

The authors argue that poverty is a failure of U.S. government rather than free markets. The growth of welfare payments has diminished labor force participation to such an extent that it has largely delinked the bottom quintile of income earners from the economy. The authors suggest that by making the poor dependent on the government the welfare system has severed their “avenue for success and personal achievement”.

The authors suggest that the current welfare system might serve “the political interests of the government” rather than the interests of poor people.

Discussion

The common element in many of these myths is a lack of understanding of the spontaneous forces of a free market, in combination with a planning mentality, and a tendency to overlook the potential for deliberate government controls to have unintended adverse consequences. Another common element is the activity of interest groups that have an incentive to create and perpetuate myths that advance their interests at the expense of others.

Lack of understanding of spontaneous forces poses a particular problem in the context of economic change. As Friedrich Hayek noted, in the context of complex spontaneous orders, it is not possible “to predict the particular changes that any event in the environment will bring about”. He suggested that this “ignorance of how the mechanism of the spontaneous order will solve such a ‘problem’ … often produces a panic-like alarm and the demand for government action for the restoration of the disturbed balance” (LLL, v1, p. 63).

Hayek went on to note that when it is possible to foresee how market forces are likely to restore the disturbed balance, the situation can become even worse:

“The necessity of adaptation to unforeseen events will always mean that someone is going to be hurt, that someone’s expectations will be disappointed or his efforts frustrated. This leads to the demand that the required adjustment be brought about by deliberate guidance, which in practice must mean that authority is to decide who is to be hurt” (LLL, v1, p. 63).

How can anti-market myths be debunked? I can’t think of a better way than via publications such as this book by Phil Gramm and Donald J. Boudreaux, who are following in the footsteps of Frédéric Bastiat. I hope that their book will be widely read in the U.S. and in other countries (including Australia) where anti-market myths seem to be even more widely accepted.

It seems appropriate to end this essay by quoting in full the paragraph by Frédéric Bastiat from which the epigraph was extracted:

“By the dissemination of knowledge, by enlightened discussion of cause and effect, to bring public opinion back to the intelligent attitude that condemns bad tendencies and resists the adoption of harmful measures, is to render a great service to one's country. When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe” (Economic Harmonies, 1850).