Super economic growth: A scientific approach
that could turn any economy around
Dr. Carlos Sabillon
Special to Honduras This Week
How fast can a developing
country like Honduras transform
itself into a developed nation like
the U.S.? That basically depends on
how fast the economy grows.
Honduras has grown at about
3% annually over the last forty
years. At that speed, it would need
a century to reach the living conditions
enjoyed by Americans today.
Honduras needs to grow by at
least 8% per year. At that speed,
in about four to five decades the
country would have similar living
conditions as the U.S.
Why is Honduras unable to
grow by 8%? For the same reason
the U.S. and the other developed
nations do not grow rapidly. Over
the last forty years, the U.S. has
also grown by just 3% per year.
As a result of that slow growth,
underemployment has gone up
and income distribution has worsened.
The U.S. needs a minimum
of 4% growth for all Americans to
flourish.
Over the last decades, developed
and developing countries have
applied the same economic policies,
and in practically all of them, the
results have been mediocre. That is why most West European countries
are enduring record levels
of unemployment. Such a situation
results from the failure of the
economic science. This field has
never been able to figure out what
causes economic growth, the only
thing that matters for the prosperity
of a nation.
None of the great economists
of the past such as Adam Smith,
David Ricardo, John Keynes, Karl
Marx or the Nobel Prize winners
has ever figured out what causes
growth. That is why it is called the ‘Dismal Science.’
It is the best-kept secret of
economists, because they tend to
talk as if they know how to eliminate
poverty and unemployment.
The truth is, they don’t know.
Those nations that managed to
overcome poverty did it without
knowing how they got there. That
is why they so frequently endure
high levels of unemployment and
underemployment. That is also
why there are big differences in
income among them. For 2007,
Germany had a per-capita gross
domestic product (measured in
purchasing power parity terms, the
best way of comparing the wealth
of nations) of about 34,000 dollars.
That is what each German took as income in that year. In the U.S. it
was 47,000 and in Luxembourg it
was 81,000.
If the U.S. knew exactly how it
got to 47,000 dollars, it would have
long ago reached the 81,000 level
because, as Luxembourg shows,
it is easy to achieve. Luxembourg
never had colonies, it has no natural
resources, and it is land-locked,
without an outlet to the sea.
In the 1980s and 1990s,
Honduras and the rest of Latin
America endorsed neo-liberal
economic policies and the results
were mediocre. Due to these bad
results, in the new millennium,
many Latin American countries
have endorsed leftist policies.
Those policies have proven to be
even worse.
It is regretful to see Honduran,
Latin American and other politicians
from the rest of the world
fight over leftist and rightist policies,
despite the failure of both
doctrines. Both have proven
incapable of generating fast (and
elusive) economic growth.
Politicians need to abandon that
scholastic, useless debate and focus
on something that has real scientific
value. The basic characteristic
of science is to demonstrate causation. That means, that for a theory
to be valid, it must show that the
facts add up with the basic postulate;
it can be proven. Neither the
right nor the left has ever added up
with the empirical data.
Recently, a new economic theory
was discovered that succeeds in
adding up with the economic data
of all the countries in the world.
Existing theories cannot even add
up with the data of a single country.
This new economic doctrine
guarantees the attainment of fast
economic growth for developing
and developed nations. It not only assures an annual rate of growth of
8% for an indefinite amount of time,
but it also supplies it with low inflation,
balanced budgets and a better
distribution of income.
This doctrine is even capable
of delivering growth of up 20%
or 30% per year. Nations such as
Equatorial Guinea (Africa), the
United Arab Emirates, Qatar and
Nauru have achieved those impressive
rates and in a flash, have transformed
into affluent nations.
If this novel doctrine is applied
in Honduras, Honduras could easily
grow by 30%, and in no time morph into a rich country. Honduran
companies would also rapidly
mutate into giants that could equal
in size the multinationals from the
U.S., Europe, and Japan. At that
pace, Honduras could have the
same living conditions of the U.S in
ten years.
Dr. Sabillon has published two
books on economics and holds both
a PhD. and a Master’s in international
relations. In upcoming
articles, Dr. Sabillon will elaborate
on the economic theory described
above. |
Honduran-made socks face US tariff
Todd Ellertson
Honduras This Week
The U.S. government will
charge a 5 percent, six-month tariff
on socks manufactured in Honduras
in an effort to help domestic (US)
manufacturers facing competition
from imports as a result of
the Central American Free Trade
Agreement (CAFTA). Only
Pakistan imports more socks to the
US than Honduras.
The tariff is scheduled to begin
on July 1st and last through the
end of the year. US manufacturing
representatives are not satisfied
with the 5 percent.
R. Matthew Priest, the
Commerce Department’s deputy
assistant secretary for textiles and
apparel, said the administration’s
decision marked the first time that
the United States has ever put
textile tariffs back in place after they had been lifted by a free trade
agreement.
The decision to temporarily
impose a tariff on Honduran socks
comes as President Bush is trying
to win congressional approval for
three free trade agreements -- with
Colombia, Panama and South Korea
-- during his final year in office.
Congress approved CAFTA, covering Honduras and five other
nations, after a hard-fought battle
in 2005. The deal with Honduras
went into effect in April 2006.
Imports of cotton socks from
Honduras from January through
November of last year rose by 99
percent compared with the same
period in 2006.
Lawmakers representing districts with sock manufacturing
had pressed for sock protections
since agreeing to support CAFTA
in July 2005. The Bush-backed
deal passed by just two votes after
House members decided to support
it upon getting assurances from
Bush that he would not let their
textile firms get wiped out. Those
lawmakers have since criticized
Bush for not doing more to protect
the U.S. companies.
(Portions reprinted from the
Washington Post)
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