AE Monthly

Articles - October - 2007 Issue

<i>A Farewell to Alms</i> -- a book considered

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What also seems probable is that the emerging internet economy is already rewriting the rules of economic development. The very definition of a developing country loses resonance as individuals interact globally to the extent they have internet connections. An international economy based on education, communication and personal initiative seems certain to alter current economic theory. An example is Indian and Irish stenographers providing transcription services via the internet to a company in Maine in the United States. The income earned in Maine and paid overseas becomes strengthens local economies and encourages, by example, others to seek similar opportunities. Individuals need not wait for local economic pre-conditions to fully emerge. They can act to join the international economy and thereby change their life, and by extension, the lives of those around them.

Finally, over the past 20 years we have seen the growth of the duel economy, none greater than that in the United States. By this I mean the continuation of the traditional economy measured as gross domestic product [GDP] and also the development of the internet economy which is changing our understanding of GDP. Not many years ago, a 2.5% annual increase in GDP in a mature economy was considered close to the maximum sustainable growth possible without inducing inflation. We have since seen 4% growth without inflation, a suggestion that the incremental economic growth occurring through the internet is different and probably has more muted inflation characteristics. Thus the very definition of growth, its elements and scale will be reconsidered and redefined.

America's economy from the 1990s on has been robust in substantial part because the internet created unexpected market efficiency by monetizing other-wise difficult to sell things, be they used cars on eBay, new books on Amazon, used books on Abebooks, the purchase of diverse services such as website development by overseas companies, even real estate and on and on and on. To this we are increasingly adding the labor of distant workers via the internet to whom a dollar an hour is a bonanza while to employers, who are perhaps thousands of miles distant, it's a bargain. These dollars may also be a crucial component in the economic development of less favored areas.

So I'm looking forward to Dr. Clark's next book. In A Farewell to Alms he makes the economic past understandable. I now look to him to do the same for the future because I think, in clarifying the past, he has given us a map to the future.

A Farewell to Alms was published by Princeton University Press in 2007. The published price is $29.95. Amazon is offering it for $19.77. At Barnes & Noble its $23.96, $21.56 for members.

AE Monthly


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