The Wages of Inflexibility

Amanda,

I maintain that our current problems are not a usual inflation/deflation. Here is a real inflation. Have you ever heard of the five hundred-year inflation that lead to the Opium Wars?

In the Middle Ages Europe was at its poorest and most ignorant. Some say that it was needed to end the violence and cruelty of the Classical times. In any case it was a true Dark Age. A dark age may be when people don’t just forget how to do things; they forget that they once could do them. So in the Middle ages Europeans had nothing to offer. But they had many things they needed and wanted. But the whole world hadn’t fallen. [ This is an argument against globalization.] The House of Islam was stagnant but brighter than Europe. China however was active and alive. China – and for a while India – wanted nothing from the rest of the world. They had plentiful food, better manufactures, silk, spices, tea, fine sailing ships. All they were greedy for were gold, silver, and jade. The Europeans didn’t understand jade – a missed opportunity. For over five centuries the Chinese exported silk and other things, but accepted only gold and silver. This lead to a serious inflation. The shortage of silver and gold made anything imported even more expensive. What was more, the Europeans didn’t even know where these things came from. These things came through Moslem middlemen. Costs grew so high that they contributed to growth. Marco Polo wasn’t believed, but he seems to have actually traveled to China. The Portuguese started to travel around Africa. People searched for their ancient knowledge. Largely in books from the Greeks and Romans that had been preserved by the Moslems. People were eager enough for lower prices that they even financed a crackpot like Columbus. By 1600 the Europeans were ahead of everyone but the Chinese. What is more, they began to accomplish things for the first time that the ancients hadn’t achieved. But still all their silver flowed to China. The vast treasuries of the Aztecs and Incas largely ended up in the Orient. Wealth increased, but the supply of precious metals by which wealth was measured decreased. America and Australia were settled. The Europeans developed things which had never been seen before. Calculating tools, weapons, ships, interchangeable parts, refrigeration, canning of foods…. England ruled India.

Then an odd thing happened. In India – more the part that is Afghanistan today – the British found Chinese buying things! For silver! Furtive Chinese were crossing the border to buy opium and smuggling it back. Now everyone knew opium was bad stuff. But it was legal throughout most of the world. We hadn’t yet found ways of making people so compliant to taxes and rules. If someone wanted to poison himself, well that was his business. In China however people were the Emperor’s property. He minded if his slaves didn’t work and enrich him. A triangle trade developed. People – especially British – sold opium to Chinese smugglers for silver. The silver was used to buy silk and tea for the home markets. Which raised money to buy the opium. Selling opium was evil. But the profit was so high because the Chinese had – inadvertently – made it so. Every tea drinker contributed to the drug trade. Also to the free market and the undermining of the Chinese Dictator.

It couldn’t last. The Chinese officials started punishing Europeans and Americans for things other Europeans had done. Neither side backed down and war ensued. The outcome was telling. Four centuries of stagnation had lead the most advanced people on Earth to the point were they were humiliated by people who five centuries before were beneath consideration. The British stole tea plants and found that they grew well in Darjeeling, India. The French found how to grow Mulberry trees and silk. And the Chinese government collapsed. Messy. Seldom taught because no one looks good. As Charley Brown said,” There’s a moral in there somewhere.”

There’s a good lecture you can download from the Gresham University website A professor named Kathleen Burk. [http://podcast.streamingwizard.com/gresham/2006/Jan06/Conflict_over_china.mp4]

That’s all I know, Amanda.

Yours,

David

“A friend is someone to whom you can say any dam fool thing that comes into your mind and not worry.”

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