Friday, 11 January 2019

An elite educated bureaucracy makes places poorer...

Or so some research seems to show....
I use a natural experiment to show that the regions of China with over a thousand years of sustained exposure to state-building are significantly poorer today. The mechanism of persistence, I argue, was the introduction of a civil service exam based on knowledge of Confucian classics, which strengthened the social prestige of the civil service and weakened the prestige of commerce. A thousand years later, the regions of China where the Confucian bureaucracy was first introduced have a more educated population and more Confucian temples, but lower levels of wealth.
The crucial point here is about prestige - in a world where the high prestige professions are non-commercial, the endeavour of the brightest to secure that prestige undermines economic development.

Much might be said about the situation in Europe where, increasingly, high prestige jobs are to be found in non-commercial environments, what Deirdre McCloskey calls the "clerisy" - academia, medicine, think tanks, central bureaucracies and a host of grand jobs in what might be called the international third sector. Even within the world of commerce, the prestige lies either with performers or with the administrators of large business systems - we are encouraged to see the creators as the parasites not as the means to provide the goodies society wants.

Thus the debate around the rich and successful isn't, "wow, how can we get more people like that creating value for society" but rather, "why aren't they paying more tax so more of us in prestige jobs can have more power and money". We're more bother by the relatively unimportant question of whether entrepreneurial businesses are paying enough money to the state rather than how we can support them (and others) to deliver more social value through that enterprise, innovation and creativity.

The lesson from history - the Dutch republic, Britain in the 18th century, the USA after the civil war, and places like Hong Kong or Singapore today - is that when doing business is valued by society and those leading is have the highest prestige then economic benefit to everyone is greatest. Sadly, we're in a time where entrepreneurship is disparaged, doing business is characterised as exploitative and non-productive, non-commercial roles are seen as the most important, most privileged.


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