Economists assume that poor countries should grow faster than rich countries over time, a process known as convergence.
It’s a reasonable theory, but only if poor countries and rich countries have similar levels of economic liberty.
But that’s often not the case, which is why I put together an anti-convergence club. I have dozens of examples of richer countries growing faster than poorer countries.
And not just for one or two years. Every example in the anti-convergence club is based upon multiple decades of data.
Even more important, every example shows that you get faster growth in nations with free markets and limited government.
Now we have a new member of the anti-convergence club. Here’s a chart that Mike Bird of the U.K.-based Economist shared on Twitter. It shows that Japan has been steadily losing ground compared to the United States over the past three decades.
So what’s the reason for Japan’s long-run decline?
Some of it presumably is caused by demographics. But there’s also been fiscal decline measured by both taxation and spending burdens.
And this chart on competitiveness is very depressing.
Amazingly, some people on the left think the U.S. should copy Japan. I’m guessing those people can’t answer this question.
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Image credit: victorpalmer | Pixabay License.
