How does Europe still have a lot of money?

chound

European nations were colonial powers hence plundered a lot of countries and became rich.

But now that they are no longer in power, how are they still so rich ?

phinds

they work and produce things.

Ryan_m_b

This is such an oversimplification of a continent that has been populated for over 30,000 years that it's unreal. Admittedly the more recent millennia have had more of an effect on the present but to write Europe off as purely an old imperial power and incorrectly suggest that its wealth was totally a product of theft is monstrously incorrect.
The history of European economics is incredibly long. Helpfully there was a series of huge disruptions in the first half of the last century that provide a good backdrop for what we see in the present day: two huge wars (IIRC the British Empire, the biggest ever known, was nearly bankrupted in just a handful of years by those activities, amongst an even more complex history of course). That somewhat simplifies matters because preventing war in Europe ever again was one of the driving ideologies behind the establishment of the organisation that has evolved into the modern European Union. So if you want to learn more, start here and here.

mheslep

Historian Niall Ferguson has a book (Civilization) and a Ted talk on this subject and spends a bit of time rebutting the West got rich through imperialism and plunder idea. Yes the West did imperialism, but that is not what made it rick. He points out that practically *everyone* tried empire - Chinese Dynasties (Ming, Qing), Ottomans, Mongols, Aztecs, Mayans, Czarist and Soviet Russians, Nippon Japan, and so on, but only the West got rich, until recently when Asia and others have joined in. He makes a good case that the reasons for success lie elsewhere: competition, scientific revolution, rule of law and democracy, medicine, consumerism, work ethic

https://www.google.com/#hl=en&gs_nf=...w=1280&bih=899

Jasongreat

They have printing presses! Debt does not make one rich, no matter how one spins it, neither does inflation. The day is approaching fast when all this will come to a head, then we will see western governments are only as rich as they are capable of plundering their own people. When those people say hell no, governments will start to default, I only hope we see this during our lifetime! Future generations wil be working from the womb to the grave paying for our careless ways if something doesn't change.

phinds

If you actually think that a default is preferable to a more moderated recovery from our stupidity, I can only suggest that you read some economics.

If Greece, as the most likely example, defaults, how do you suppose they will feed themselves? They only produce 60% of the food they consume and no one is going to sell them anything for worthless Drachmas, and that's just ONE example of how they will descend into chaos.

lisab

That.

russ_watters

...people buy.

Zarqon

Well, first you must realize what wealth actually means.

Does it mean having a lot of money? No, because if it did, all you had to do would be to print more money and you would be rich. This is obviously wrong. No, what having wealth actually comes from is: what can you do with the money that you have.

The answer to that question is that it depends on the quality of the services that are available. If with your money you can buy everything you want, both basic necessities, like good food/health care/houses and luxuries like technology/good cars/vacations, then you must by all definitions be considered wealthy. As such, what makes a whole region rich, is that it has very good living standards, such that as many services as possible are available to as many people as possible.

Note however, that the wealth is not the same throughout europe, some countries are a lot better off than ofthers. I think you will find a good correlation between countries that are considered rich and countries that have good scores on democracy and stability, such that high living standards can be achieved.

Tosh5457

Nice xenophobic way of starting a topic. What makes a country rich is its GDP, which measures production of goods and services. Europe has high GDP/capita, which means European countries are productive countries.

I think you're confounding 'wealth' with 'variation of wealth', which is something I see a lot of people do nowadays because of the crisis.

Even though Europe went through an economic depression, that only made GDP go down a few %, so it's still a rich area. Even in the case of countries who have deficits problems, that doesn't make them poor, it only makes them lose a part of the wealth (because of the inevitable downfall of GDP caused by austerity measures).
Even if a government of a country goes bankrupt, the country can still continue to be rich, although it'll lose a great part of its GDP. Look at Iceland, they went bankrupt but they kept on being a rich country. A country doesn't stop producing all the things it produced all of a sudden.

vici10

In my opinion, the main change that led to increased wealth was industrialization, the transition of society from subsistent agricaltural to modern industrial one.
Once such transformation happened it seems to me that it is easier to continue to support it and generate increased wealth based on existing infrastructure.

Transition from agricultural to modern society needs a lot of capital. It is difficult to talk about all Western Europian countries since they have different histories, but speaking roughly western europian countries patrtly took capital from colonies. In other words, colonies provided important part of capital needed for industrialization.

Countries that did not have colonies or were late in the game had much more difficult time to industrialize. Some are still not fully industrialized with high numbers of subsistent farmers.Such countries had to take loans from richer countries, under those rich countries conditions that there not always in the interests of the countries taking loans.

This maybe one of the reasons why India is not as rich as England.

chound

But, does that mean there has been no change in the wealth of European nations after giving independence to asian and African countries ?

vici10

You should look on existing research about impact of loss of the colonies on Europe. I do not have all materials ready at the moment. In some sense yes, it did have impact, for example England was a world power when it had colonies, and it lost world dominance when it lost its colonies.

But it seems to me that the main transition from agricultural society to an industrial was more important one, and after loosing colonies, countries did not return back to preindustrial societies. They already have necesary infrastracture to go forward and did not need colonies that much since industrial production by its nature is exponential one, comparing to previous modes of production.

Tosh5457

There was a change, the GDP has been rising consistently.

mheslep

Counter examples of wealthy or rapidly becoming wealthy countries without colonies: Japan, United States, all of Western Europe a decade or so after WWII, China since 1980. Try this reasoning instead:
http://www.physicsforums.com/showpos...99&postcount=4

vici10

Regarding United States, it had much more effective thing, it had slavery. According to University of Houston digital history page, slavery was indispensable in US industrialization.

http://www.digitalhistory.uh.edu/his...n_economic.cfm

Regarding Japan, it is a factual mistake to claim that Japan did not have colonies during its industrialization at the turn of the 19-20 century. Japan is an interesting case, since it is a rare example of Asian country that was not invaded and devastated by western countries. Seeing rapid European expansion, they decided to imitate it. That included colonial expansion of Japan and extraction of resources from its colonies for industrial development.

According to encyclopedia Britannica :

http://www.britannica.com/blackhistory/article-25929

So an argument can be made that success of Japan was a result of copying western way of industrialization through colonial expansion.

Regarding Western European countries after WWII, most of them were already highly industrialized countries with highly trained industrial workforce and not landless peasants. And they become so during their colonial times. So it is a poor example of industrialization from agricultural to modern industrial without colonies. Germany was so industrialized that it could conquer almost all Europe. Of course, a lot of infrastructure was destroyed, but a lot also survived, such as trained industrial workforce for example. Of course help of US (being afraid of communists taking over Europe) in the form of Marshal plan also helped.

Regarding China, it is still in the process of industrial development and it still did not become fully industrial country. Time will tell if China will succeed in it.

Interesting fact regarding China is that prior european and american opium wars on China (first opium war 1839 to 1842 and the second opium war from 1856 to 1860), in 1820 GDP of China accounted for about 32.4% of the world GDP. GDP per capita before european invasion was about 89% of world average. And at 2011 with all its great economic growth China is still around only 10% of world GDP.

Modern China's industrialization is mainly based on foreign multinationals. China does not have yet significant national industry on par with developed industrial countries. It may be dangerous, since if something will happen, (for example Chinese workers will want the same compensation for their work as American ones) and foreign multinationals will pull off China, the Chinese may have little more than what they started with.

EDIT:
Regarding your reference to Niall Ferguson, it seems he is a great fun of counterfactual history and his argumentation, according to some historians, in his Civilization book is quite odd.
From wikipedia:
http://en.wikipedia.org/wiki/Niall_Ferguson

rootX

I disagree. It's the people self desires to move away from rural areas towards cities. This is the reason why industrialization takes over agricultural. I doubt you need a lot of capital.


It's easy to come with theories that might appear to explain how countries get rich. However, they rarely work IMO. There are few models like Solow–Swan growth model that try to explain the growth by looking at t productivity, capital accumulation, population growth and technological progress but with very limited accuracy.