Foundations of Economic Prosperity

Course No. 5642
Professor Daniel W. Drezner, Ph.D.
Tufts University
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Course No. 5642
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Course Overview

Prosperity has transformed the world. Defined as the ability to afford goods and services beyond basic necessities, prosperity is now a way of life for most residents of developed countries—so commonplace that few people realize what a rare and recent phenomenon it is.

A mere two centuries ago, most people lived at a subsistence level, in or near the edge of poverty, as the overwhelming majority had since prehistoric times. Then the Industrial Revolution began and per capita income shot up. It is still rising today.

But the story of prosperity is far from simple—or complete. Many people in the developed world fear that their children will be less prosperous than they are. Meanwhile, new economic titans such as China and Brazil enjoy year after year of rapid growth and an ever-rising standard of living. Elsewhere in the world, millions are still trapped in poverty, despite the best efforts of organizations such as the World Bank to help lift them out of it.

Fostering and sustaining economic prosperity—whether at the individual, national, or global level—is a multilayered endeavor that reaches far beyond economics into the political and social spheres. The complexity of the phenomenon raises equally complex questions:

  • Why is prosperity distributed so unevenly?
  • Why isn’t the path to prosperity predictable?
  • What, if anything, can be done to lift more people out of poverty?

Foundations of Economic Prosperity gives you an unrivaled overview of one of the most pressing issues of our day, in 24 half-hour lectures taught by Professor Daniel W. Drezner of the prestigious Fletcher School of Law and Diplomacy at Tufts University. Professor Drezner takes you behind the headlines and into the debates to dispel some common myths about prosperity and get at deeper truths.

In this stimulating, wide-ranging course, Professor Drezner shows that achieving prosperity involves more than economics. Psychology, sociology, political science, and history also come into play. By taking this broad view, he leads you to fundamental insights about how the modern world works and a deeper understanding of the functioning of the U.S., European, Chinese, and other major economies, as well as an appreciation for the special problems faced by underdeveloped nations.

Mysteries and Myths of Prosperity

Foundations of Economic Prosperity begins with an explanation of basic economic concepts. These are then applied to an increasingly wider sphere, covering prosperity on individual, national, and global scales. Noting that prosperity is surprisingly difficult to understand, Professor Drezner addresses some of the mysteries that surround the subject, including these:

  • Why England? The Industrial Revolution started in England, but scholars disagree about why, since other nations were also primed for change. Was England’s position in world politics the key factor? Or its institutions? One theory argues that the distinctive demography of the British gave them a crucial edge.
  • Riddle of the two Koreas: Few nations vary so radically in prosperity as North and South Korea. Yet both have the same natural resources, ethnicity, and culture. For the first 25 years of their existence, both countries showed remarkably similar growth patterns. What caused them to diverge so dramatically?
  • Easterlin paradox: A controversial finding by economist Richard Easterlin shows that there is no correlation between increasing prosperity and happiness in the developed world. How accurate is this conclusion? Does the effect change with levels of affluence? How much happiness can money buy?

In his quest to uncover the principles that guide the accelerating improvement of material life, Professor Drezner also refutes widely believed myths about prosperity, among them:

  • Myth—China is prosperous: China is economically powerful, but the view that it is prosperous is mistaken. By several different standards, China is still a developing country, ranking with nations such as Jamaica, Turkmenistan, and Belarus in per capita income, health, education, and other measures of prosperity.
  • Myth—Character is all: While individual behavior matters a great deal, people can’t entirely control their own economic destiny. National and global conditions matter. For example, Steve Jobs could not have built Apple Computer in a country that did not offer educational opportunities and a technology infrastructure.
  • Myth—Prosperity is self-sustaining: The idea that once achieved, prosperity is self-sustaining is a misconception. Many factors can derail prosperity, from pandemics to financial crises. Professor Drezner uses Argentina as a case study of a once-prosperous nation that went into a prolonged economic decline.

Successes and Failures

Foundations of Economic Prosperity follows dozens of case histories that illustrate what works and doesn’t work in the drive to increase economic growth. A superb storyteller, Professor Drezner reaches back to examples such as the statue-building culture of Easter Island that prospered centuries ago, until its mammoth public-works effort destroyed the island’s ecosystem—a cautionary tale to all developed societies. In another lesson from the past, Professor Drezner describes the economic policy called mercantilism that trapped European powers in growth-killing trade practices from the 16th to 18th centuries.

You will also learn about the following intriguing examples of prosperity won or lost:

  • Financial bubbles: The Dutch tulip mania in 1637 saw the value of a single tulip bulb rise to 45 times Holland’s per capita income. The price soon crashed in a boom/bust scenario that has been replayed many times, for instance in the “dot com” bubble in 1999–2000 and the housing bubble that led to the 2008 financial crisis.
  • Globalization: The trend toward an integrated world economy is not a recent phenomenon. The era of globalization that started in the 1850s and ended with World War I brought far more dramatic changes than those seen today—in communication, transportation, productivity growth, and financial innovation.
  • Politics versus prosperity: After the breakup of the Soviet Union, many economists predicted a bright economic future for Ukraine—because of its well-educated workforce, heavy industry, and productive farmland. But Ukraine did not do well. The missteps made by its politicians illustrate the enormous power of the state to get things wrong.

Prosperity Tips You Can Use

How can individuals capitalize on long-term trends in the growth and distribution of prosperity? Professor Drezner—whose experience extends beyond academia to include positions with the U.S. Department of the Treasury and the RAND Corporation, as well as extensive international travel and consulting—is full of insight on this question. He suggests, for example, that developments since 1980 underscore the increasing importance of human capital over physical capital—the value gained from investing in people over physical assets. Human capital is the product of education in all its forms, from elementary literacy to job training to undergraduate and graduate studies, and it is more important than ever to a person’s economic prospects.

As a start on your own road to greater prosperity, take this step to invest in an unparalleled explanation of the prerequisites to achieve it in the Foundations of Economic Prosperity.

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24 lectures
 |  Average 30 minutes each
  • 1
    The Foundations of Economic Prosperity
    Begin the course by contrasting the relative prosperity of North and South Korea. What explains the marked disparity in a region with the same geography and culture? Next, define prosperity and examine some widespread myths about how and why individuals and countries achieve affluence. x
  • 2
    Does Economic Prosperity Make You Happy?
    Explore the connection between income and happiness, focusing on the Easterlin paradox, proposed by economist Richard Easterlin in 1974, which holds that no correlation exists between happiness levels and per capita income across the developed world. Evaluate evidence for and against this conclusion. x
  • 3
    Varieties of Entrepreneurship
    Examine three types of entrepreneurship: productive, which includes innovation and expansion into new markets; destructive, which involves coercion or violence; and unproductive, such as monopoly-seeking. Today, the first is universally seen as the most desirable, but the other two were long regarded as legitimate or even prestigious. x
  • 4
    Individual Prosperity—The Developed World
    Probe the most effective strategy for ensuring individual prosperity in the developed world. First, study how wages and income are determined in a free market. Then, learn why the developed world puts a premium on human capital, which is synonymous with education. x
  • 5
    Individual Prosperity—The Developing World
    Developing countries vary widely in affluence, but common characteristics of their economies make it difficult for individuals to escape from poverty. Learn how the rule of law and modern capital markets are preconditions for fostering productive entrepreneurship in these nations. x
  • 6
    Foundations of National Prosperity
    How can countries as a whole prosper? Evaluate the ways that incentives for individuals often work against sustainable national prosperity. Study the limitations of gross domestic product as a measure of economic strength, and review the steps that propelled China into its present phase of rapid growth. x
  • 7
    Perils to National Prosperity
    Survey three popular explanations for the failure of many nations to prosper, discovering that counterexamples cast doubt on these theories. Then investigate the distinction between public goods that enhance growth, and public “bads” that inhibit it. The latter category includes overtaxation, excessive regulation, protectionism, and war. x
  • 8
    Political Foundations of Prosperity
    Turn from economics to politics, investigating the truth behind the view that democracies tend to contribute more to prosperity than autocracies. While authoritarian political institutions can, at times, lead to short bursts of prosperity, democracies have the advantage over the long term. Learn why here. x
  • 9
    Mysteries of the Industrial Revolution
    The graph of per capita income over time remained flat throughout human history, until 1800 when it took off due to the Industrial Revolution. Why was England the seedbed for this radical transformation? Study theories that try to explain why the English were in the right place at the right time. x
  • 10
    Sources of Poverty
    Probe the challenges facing the world’s estimated 1.25 billion poor people. Some economists believe that a “poverty trap” condemns the poorest nations to the bottom of the economic ladder. What is the evidence for this theory, and are there effective measures to break the cycle of poverty? x
  • 11
    Reducing Poverty with Economic Development
    Trace some of the big ideas that have guided the World Bank in its promotion of economic development in poor nations. Despite a wide range of approaches, no broadly effective formula has yet been found. This suggests that the developed and underdeveloped worlds obey fundamentally different economic models. x
  • 12
    National Prosperity in the Developing World
    Most economic development formulas fail miserably, but there are two proven pathways to prosperity. Learn how natural resource exploitation and export promotion allow some countries to break through to prosperity. Focus on the pitfalls that must be avoided for these approaches to work. x
  • 13
    National Prosperity in the Developed World
    As societies become developed, socioeconomic and sociopolitical changes create new impediments to continued economic growth. Investigate the challenges presented by four big problems: a decline in innovation, a demographic slowdown, a shift away from income maximization, and the paradoxical drawbacks of political stability. x
  • 14
    Can Prosperity Be Lost?
    Once attained, can prosperity be lost? Probe the circumstances that cause a developed country to lose economic ground. Focus on Argentina, which a hundred years ago was one of the ten richest countries in the world. What precipitated its decline, and what other factors threaten any nation’s hard-earned prosperity? x
  • 15
    Inequality and Prosperity
    Intuitively, one would expect that poverty and economic inequality go together, but history suggests that the opposite is true. Survey the rise and fall of inequality in a range of nations, including the United States. Is there a tipping point after which inequality can harm mass prosperity? x
  • 16
    Globalization and Global Prosperity
    Globalization is a cluster of technological, economic, and political innovations that have transformed the world economy. Investigate why globalization is not a new phenomenon and why it leads to greater prosperity. Then probe some of the myths about globalization, and analyze its role in promoting economic growth. x
  • 17
    Great Powers and Global Prosperity
    Address the importance of global public goods, which are services provided to other nations without profit, typically by a superpower, or hegemon. Great Britain played this role during the height of its empire. More recently, the United States has been the guarantor of global public goods. x
  • 18
    The Washington versus the Beijing Consensus
    Weigh the strengths and weaknesses of two competing forms of capitalism: the Washington consensus, developed by the United States during the cold war; and the Beijing consensus, which represents China’s approach to economic development since the 1980s. Which model better promotes global prosperity? x
  • 19
    Political Challenges to Global Prosperity
    Begin a series of lectures on challenges to global prosperity. The biggest threat to any nation’s prosperity is war. Look at three broad explanations for why war is now on the wane and what could reignite conflict on an economically ruinous scale. x
  • 20
    Financial Challenges to Global Prosperity
    As an example of financial challenges to global prosperity, focus on the housing bubble that triggered the 2008 financial crisis. Study different asset bubbles, including the 17th-century tulip mania. Also learn the five phases in the life cycle of a bubble—from the enthusiastic takeoff to the inevitable clean-up. x
  • 21
    Will the Developed World Stagnate?
    In the past few decades, the developed world has seen a general slowdown in per capita income growth. Is this a permanent trend? Review the factors that boost prosperity, then examine how each of these drivers of growth reaches a point of diminishing returns. x
  • 22
    Global Prosperity and the Environment
    Probe the environmental challenges of prosperity, focusing on the concept of negative externalities, which are costs not transmitted through price and which arise when dealing with environmental effects. Explore strategies for correcting externalities with market forces. In this context, address the problem of climate change. x
  • 23
    Ideological Challenges to Global Prosperity
    Study the critics of prosperity, who object to key elements of capitalist society. Investigate the four “R’s”: the romantics, the reactionaries, the revolutionaries, and the radicals. Among the thinkers you examine are Jean-Jacques Rousseau, Karl Marx, Friedrich von Hayek, and Ayn Rand. x
  • 24
    The Ethics of Global Prosperity
    Review the key conclusions reached in the course. Then close by looking at the ethical dimension of prosperity: What, if anything, do the globally prosperous owe the global poor? Test your own views against libertarian, contractarian, and cosmopolitan approaches to this question. x

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Your professor

Daniel W. Drezner

About Your Professor

Daniel W. Drezner, Ph.D.
Tufts University
Dr. Daniel W. Drezner is Professor of International Politics at The Fletcher School of Law and Diplomacy at Tufts University. He earned his B.A. in Political Economy from Williams College and his M.A. in Economics and Ph.D. in Political Science from Stanford University. Beyond academia, Professor Drezner served as an international economist in the U.S. Department of the Treasury's Office of International Banking and...
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Foundations of Economic Prosperity is rated 4.5 out of 5 by 28.
Rated 4 out of 5 by from Bu…Bu…But ! Overall, this is a wonderful course for someone who is trying to get started thinking about economic prosperity. BUT those who expect sophisticated insights from a man who “has served as an economist in the US Dept of the Treasury’s Office of International Banking and Securities Market” may be disappointed. Overall, this is a wonderful course for someone who is trying to get started thinking about economic prosperity. BUT those who expect sophisticated insights from a man who “has served as an economist in the US Dept of the Treasury’s Office of International Banking and Securities Market” may be disappointed. L4 Drezner’s point regarding financial advantage of advanced degrees is obvious BUT he ignores any consideration that degrees have become “labels” and are often otherwise useless to an employer. These labels come at increasingly onerous price eroding the margin of financial usefulness (see L10). Drezner attributes “luck” to success stories within large economies BUT ignores Washington insider effects. L5 Drezner notes that corruption in the developing world creates “difficulty collecting taxes” but ignores FANG stocks that don’t pay significant taxes. He correctly notes that in small countries, “legal business becomes difficult because of the need to bribe officials” BUT he ignores lobbying by powerful global corporatists as a sophisticated equivalent in developed countries. Ask a mall storeowner whether bribes or tax-free, federal-insider FANG globalists are harder to compete with. L6 Drezner correctly states that GDP = C + I + G + (X-M) “measures the total value of all final goods and services and then subtracts the cost of producing those goods and services.” He notes that GDP can grow while per capita income remains stagnant BUT he doesn’t explain what happens when stagnant per capita income becomes negative relative to inflation. Unlike other economists, Drezner does not discuss whether GDP is a valid measure when both Government goods (G) and Consumer spending (C) are driven primarily by debt. For example, from 2008-2016, there was an immediate, persistent $1.25T/year increase in federal debt: double the historic rate. If the cost of producing government goods (G) suddenly radically increased, BUT what revolutionary item was produced to allow G to remain positive after subtracting out its costs? Certainly it could not have been redistribution, healthcare, or subsidy - these would be redundantly represented under C. G is supposed to be a distinct final good or service (such as air traffic control or the military – both of which were being reduced at that time). If no new tangible G good or service has been produced then why did the debt behind G suddenly double? Or is debt now considered to be a good/service because the Federal Reserve purchased it? In other words, is the G in GDP really just expanding nontangibles or, worse, money diverted? Given the size of the numbers, the subject is important. Drezner then compounds confusion about GDP by stating it is a measure of “flow not stock”. A “total value of all final goods” equation such as GDP requires quantity variables and has them. BUT a “flow” equation requires a rate variable or a second equation including GDP as a time variable. However, I believe that Drezner’s “flow not wealth” concept is a correct macroscopic inference inadequately justified by his short-shrift presentation. L8: Drezner actually favors autocracy in developing countries while noting autocratic “failures are pretty epic”. He describes the democratic system’s ability to vote out incompetents BUT fails to consider a partisan electorate focused on political favors over national survival. Instead, he sadly wallpapers over political favor by saying: “Consumption subsidies to the “selectorate” to ensure their loyalty might ensure better health care and access to better schools” while supplying no data to prove such an obtuse theory. L16-17 Globalism: Drezner describes cautions from Milton Friedman and others as myth. His arguments include “capital has been rushing from emerging markets to mature markets”. BUT he neglects discussing whether rushing capital has been drawn in by Fed easy money policy. As I write, the newest Federal Bonds are no longer eagerly purchased overseas. L22-24 An excuse for Federal inefficiency: “because an economy is so complex, it is extremely difficult for the gov’t to limit its interventions without causing unforeseen complications”. BUT the obverse argument is that the unforeseen complications ARE the interventions – ask most healthcare providers. Drezner’s conclusion argues against those free-marketers who “are so fervent that they threaten to subvert the…system” seems overwrought. Doing away with the gov’t is no realistic person’s goal BUT Drezner does not afford a healthy concern gov’t size. According to Gallup currently 17% of the US workers are Fed, State, or local and these workers influence the “free market” (via contracting prejudices) to the tune of 21% of GDP (FRED data 2/28/18, Fed Net Outlays). Drezner needs to quantitate not editorialize.
Date published: 2018-08-27
Rated 5 out of 5 by from Foundations of Economic Prosperity The course was interesting. He presents points of view that he has learned over the years and points of views of others. At the end of most lectures he discusses the weaknesses of these points of view. In the final lectures he presents a few points of view but leaves it up to the student to think about them. I suppose this is because Economic theories will change over time.
Date published: 2018-08-04
Rated 5 out of 5 by from The best explanation of the world economy Best presentation of the developing economy and the reasons they are struggling the improve and change they economy. Inside explanation of the poor countries underdevelopment. better than economist explanations.
Date published: 2018-01-08
Rated 2 out of 5 by from not what I expected I have only started, but I believe I will finish it. It seems like a high school course taught by a life long teacher with too many degrees and not much life experience
Date published: 2017-08-28
Rated 2 out of 5 by from Too much telling us what doesn't drive economic prosperity. Just tell me what does.
Date published: 2017-06-18
Rated 5 out of 5 by from Fantastic! There was not a dull moment throughout. I was engaged from start to finish while the "secrets" (common sense reasons, comparisons, historical backup, etc.) were laid out.I am better equipped to participate in discussions relating to our relative wealth and why it is so.
Date published: 2017-04-14
Rated 5 out of 5 by from Foundations of Economic Prosperity Fascinating lectures. The professor has opened my eyes to many different concepts.
Date published: 2017-01-04
Rated 5 out of 5 by from A refreshing view of economics Economics, political science, and history, is there any other way to make sense out of economics? Economics is not an easy subject and Professor Drezner makes it very, very clear that economists do not have easy answers. I like that. About the discipline of economics, I am a skeptic. Apparently Professor Drezner's discipline is political science. Economists' influence on economies largely passes through the political system. Economists evaluate their theories largely through the lens of history. That makes this course a perfect sweep. I found the professor's approach and style refreshing. He takes a somewhat confrontational approach, one of point-counterpoint, of questioning the dogma, of discussing the historical record, and of placing it all within political realities. I said there are no easy answers. Maybe there are a few. What is prosperity for example? This is a pretty simple question and Professor Drezner provides a pretty simple answer. Another answer: to increase prosperity you need to increase productivity. That answer struck me as simultaneously profound and shallow. Profound because it rings true. If I want to increase my prosperity I need to produce more or produce stuff with higher value. The answer that we need only increase productivity seems shallow because it is not that simple. I could exploit others, for example, and suck up their value. That was the way though much of history, and is common even today. Even given that we wish to take a more enlightened path just saying we need to increase productivity doesn't provide any empirical guidance without a whole lot of added details. Many brilliant economists have produced many, detailed, thoughtful theories on how to improve world-wide prosperity. Why haven't they worked, at least not very well? Professor Drezner discusses that at some length. If you want to argue that it is not the economic theories it is the politics then you are making my point and this course is for you. I do not recommend this course as an introduction to economics. Economics courses have not been high on my list so I am not sure what the best introduction would be. However, I do think "Thinking Like an Economists: A Guide to Rational Decision Making" is a good choice. I am not sure what other treatments of political science there are within The Great Courses. This is certainly my first. It peaks my interest in the subject. If anyone can recommend another please leave a comment. One more thing, Professor Drezner doesn't like English beer. I think he is wrong on that count. I don't agree with some other point he makes either, but he has given me a lot to think about. Like English beer, Professor Dresser's approach to economics is refreshing.
Date published: 2016-07-18
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