The Great Divergence

Yesterday afternoon I happened into a thought-provoking TED video presentation about the haves and have-nots of this world, and the reason behind this wide wealth gap.  I’ve been thinking about what the speaker said, mainly because we were subject to a cruel military tyranny in Panama for more than twenty-one years.  Having freedoms and losing them is a tremendous blow to the dignity of people.  It happened to us with a swift military coup in October 1968.  The nightmare ended on December 20, 1989 when the United States military forces toppled General Noriega’s tyrannical regime.  Then we regained our lost freedoms and our dreams.

Panama is now a democratic country, but its democratic institutions are fragile and we could end in another political nightmare if we are not careful in caring for and consolidating our democratic institutions.  Democracy, freedom, civil rights, and political options should not be taken for granted.  People in Cuba, North Korea, Syria, and Burma, just to name a few are aware of this irrefutable fact.

Most of the $195,000 billions of wealth in the world was made after around 1800.  The wealthy make about 19 percent of the world’s population and own 66 percent of this gargantuan wealth.  It is known as the Capitalism Paradox or the Great Divergence.  This leads to the 65 thousand-dollar question:  Why are countries rich while others are in a constant state of economic malaise?  The answer is because the wealthy countries have laws and rules invented by reason.  It has nothing to do with natural resources or geography.  It is because of their ideas and its institutions.  Let’s take a look at some of these institutions:

  1. Competition
  2. The Scientific Revolution
  3. Property Rights
  4. Modern Medicine
  5. The Consumer Society
  6. The Work Ethic

Lack of competition creates stagnation and staleness.  The Scientific Revolution brought forward a quantum economic  leap forward as man gained more control over nature (e.g., railroads, canals, steam-powered engines, the assembly-line, factories and so forth).  Land in the hands of many, is a lot better than land in the land of the few.  Good medicine provides health which in turn provides wealth.  Sick people are not productive.  Wealth is created by production, distribution and consumption.  If the demand is low, factories have to shut their doors and people are unemployed.  That’s what happens when unemployment goes through the roof during the depression cycles.  And finally, people should have a desire to work.  Without production of goods and services, wealth can not be generated.  Laziness is equal to poverty.

I would like to finalize this blog post about the inequality of wealth in the world, with a powerful quote from Winston Churchill.  This is what he said in 1938.

“Civilization means a society based upon the opinion of civilians.  It means that violence, the rule of warriors and despotic chiefs, the condition of camps and warfare, of riot and tyranny, give place to Parliament where laws are made, and independent courts of justice in which over long periods, those laws are maintained. 

That is Civilization—and in its soil grow continually; freedom, comfort and culture.  When Civilization reigns in any country, a wider and less harassed life is afforded to the masses of the people.”

2013 is a political year in Panama.  We will elect a new President on May 2, 1014 for a period of five years.  I pray that my peers understand the value of freedom and the options it provides for a community.  Money alone will not solve our problems.  Dignity is more important to the human spirit than wealth alone.  Good Day.

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