Economic Paradigms & The Dustbin of History

Currently reading through The Great Sea, and while I am still only about 60% of the way through it, would highly recommend it for everyone with the inclination and patience to learn a lot about the history of the Mediterranean.  It begins with the beginning – in other words, with the first signs of human habitation in the maritime provinces of the surrounding lands and of travel across the water.  It was, needless to say, a very long time ago.  It then goes onwards to the advent of recorded history with the Egyptians and Phoenicians, and then the Greeks, the Carthaginians and Romans, and onwards as the sea becomes a riotous mix of an incredible variety of cultures in the Dark and Middle Ages.  I’m only now starting to reach the end of the Middle Ages and the Renaissance period, coinciding with the discovery of the New World and the flourishing of the Atlantic economy.  Needless to say, for anyone with even a sketchy familiarity with European history (including myself), this was when Europe’s economic center of gravity shifted decisively away from the Mediterranean and it entered a period of relative decline.  I am curious to see how the history proceeds from there.
It makes one wonder which of today’s economic model is headed for the dustbin of history alongside that of Venice and Genoa.  After all, mercantilism based on luxury good trading and slave-powered galleys used to underpin one of the most prosperous economies in the world.  While the vast majority of the world is “capitalist” today, there are some pretty noticeable differences between the governing economic paradigms.  There are the developed economies and developing economies, obviously, along with the various post-Soviet and currently-dictatorial kleptocracies like the Central Asian Republics.
Even within the developed economies there are a few different paradigms, and one of the big divisions is between the high-wage, high-service ones of Northern Europe and Northern North America and the low-wage, low-service paradigm of the American South.  Its combination of low wages, a relatively low level of education, and minimal taxes and government have been pretty successful over the past few decades (though of course with generous subsidies from the North).  I just puzzle over its relatively unusual success – we pretty much know what the high-wage, high-service model of the US North looks like it as it succeeds, since it’s pretty well established in Northern Europe and in a few places in North America (Canada, Massachusetts). 
But there’s nowhere in the First World that has prospered on the basis of low wages, minimal education, and a strictly limited state.  To its credit, the American South and its governmental philosophy is often regarded as backward and reactionary, but its entire economic paradigm really is revolutionary in that it is blazing a fundamentally new path of economic development.  I happen to think it has fairly low limits to its potential and basically thrives on the largesse lavished upon it by the North, but hey – it’s worked for (some people in) the South so far.

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