The Wealth and Poverty of Nations: Why Some Are So Rich and Some So Poor (W W Norton & Company; 1998)

FRONTIERS 307

In 1870, the United States had the largest economy in the world, and
its best years still lay ahead. By 1913, American output was two and a
half times that of the United Kingdom or Germany, four times that of
France. Measured per person, American GDP surpassed that of the
United Kingdom by 20 percent, France by 77, Germany by 86.^30 This
American system of manufacture had created, for better or worse, a
new world of insatiable consumerism, much decried by critics who
feared for the souls and manners of common people. The world had
long learned to live with the lavishness and indulgences of the rich
and genteel; but now, for the first time in history, even ordinary folk
could aspire to ownership of those hard goods—watches, clocks, bicy­
cles, telephones, radios, domestic machines, above all, the automo­
bile—that were seen in traditional societies as the appropriate privilege
of the few. All of this was facilitated in turn by innovations in market­
ing: installment buying, consumer credit, catalogue sales of big as well
as small items; rights of return and exchange. These were not unknown
in Europe, which pioneered in some of these areas. It was the synergy
that made America so productive. Mass consumption made mass pro­
duction feasible and profitable; and vice versa.

On the Shortcomings of Economic Logic

Adam Smith took note of the absolute prohibition that Britain had
imposed on its North America colonies not to build steel furnaces or
slit mills; nor to make finished iron and steel articles even for their
own consumption. In addition, Britain had banned commerce
between colonies in fur hats or woolen goods,

... a regulation which effectually prevents the establishment of any man­

ufacture of such commodities for distant sale, and confines the industry of

her colonists in this way to such coarse and household manufactures, as a pri­

vate family commonly makes for its own use, or for that of some of its neigh­

bours in the same province.^31

of bureaucratic constipation. Fortunately for the French, the European Community
has imposed new standards.