6 ms·

Why some nations are rich and others poor (2016)

27 points by novaRom 6y ago

ars 6y ago
"Poor countries are poor because they are ruled by narrow elites that organize society for their own benefit at the expense of the citizenry." Seems to me he got cause and effect backwards. The same thing that causes countries to be poor also make them "easy picking" for elites who want to exploit them.
- praptak 6y ago
  A proper experiment is obviously infeasible but there are countries that a) went from poor to rich and b) have had strong citizenry even back when they were poor.
- jsperson 6y ago
  This is why I am skeptical about the long term threat/success of China. With Xi now effectively chairman for life he will put more energy into maintaining his position than governing.
  - mc32 6y ago
    Unfortunately for the governed there is a lot left to drain out of their reservoir. Take Venezuela for example. It’s been going on 20 years too long but it keeps going.
    - jsperson 6y ago
      On the flip side - it also means that if we have a bad president or two in the United States, we’ll still probably be ok. With multiple branches of government there’s only so much damage that can be done in 4/8 years.
      - karmakaze 6y ago
        I used to think that. Then this term happened. Or I still do but severely underestimated "only so much damage".
  - ByteJockey 6y ago
    Personally I think it's less about how much energy is put into maintaining your position, and more about how the system adapts to the presence of an individual. When an individual is in power for an extended period of time, the system adapts to them being there. The longer they're there, the more the system comes to rely on them being there instead of an arbitrary person being in that position. This, I think, is one of the reasons that the transition period in long running monarchies is so dangerous. All of the plans that relied on the specific qualities of the former leader just went out the window.
- AnimalMuppet 6y ago
  And what, in your view, is it that causes countries to be poor?
- DylanDmitri 6y ago
  "Why Nations Fail" is an excellent book on this topic. There's a cycle between poverty and exploitation, and the book does an excellent job detailing many historical examples.
unoti 6y ago
Political institutions are part of it, but probably not the most important part. The excellent book Guns, Germs, and Steel[1] lays out very well researched reasons for the disparities we see today. Highly recommended reading! Spoiler: What kind of crops and livestock you have paired to your climate over history is a big factor (number of calories you can raise per acre). What kind of livestock you had or didn't have also relates to what kinds of diseases might wipe you out (see Aztecs). And what kinds of raw materials you have available impacts what kind of commerce you can engage in. These factors over time have a huge impact on how civilizations advanced relative to each other. There's a summary of the book on Wikipedia[2], along with some interesting criticisms. [1] https://www.amazon.com/Guns-Germs-Steel-Fates-Societies/dp/0393354326 https://www.amazon.com/Guns-Germs-Steel-Fates-Societies/dp/0... [2] https://en.wikipedia.org/wiki/Guns,_Germs,_and_Steel https://en.wikipedia.org/wiki/Guns,_Germs,_and_Steel
- ghaff 6y ago
  I'd add Why the West Rules for Now by Ian Morris. https://en.wikipedia.org/wiki/Why_the_West_Rules%E2%80%94For_Now https://en.wikipedia.org/wiki/Why_the_West_Rules%E2%80%94For... It makes the (to me) convincing argument that geographic determinism, while important, doesn't really explain why the western core given that the eastern core surpassed the west on many measures after the fall of Rome. (Though it does explain why one of those two cores were probably ordained to win out.) But the western core was in a better situation to exploit the Industrial Revolution which basically made everything before it almost irrelevant. Neither book does much to explain why well-positioned modern states, e.g. Argentina, weren't able to better take advantage of their position and natural resources however.
  - lezojeda 6y ago
    In Argentina's case, decades of failing statism and economy intervention mixed with military dictatorships. Inflation rampant since the 40s with around only one decade (1990-1999) with 1 digit inflation. Enterprising in Argentina is an absolute nightmare.
- mc32 6y ago
  Argentina and Mexico were almost at parity with the US near the turn of the XX cent. Russia (Federation, Empire, Soviet Union) had and have massive natural resources and yet they lag behind many countries that have vastly fewer resources than they do (Japan, SKorea).
asdfman123 6y ago
> The tools of extractive economic institutions include abolition or severe limits on private property, state-run enterprises, excessive regulation and taxation, and more. > Acemoglu and Robinson acknowledge that, under some conditions, growth can occur under extractive political institutions as in the case of China. So I suppose that's not a very good definition of "extractive political institutions," then, is it? Perhaps wealth extraction can even occur in countries that claim to be for free market capitalism.
- AnimalMuppet 6y ago
  First, "extractive" isn't a binary, it's a continuum. All economies are extractive to some degree - everybody's got taxes. But some are considerably more extractive than others. Second, China. China's economy was very extractive under Mao. (If you don't like the term "extractive", call it "state dominated" instead.) Under Deng, they became less so, and the economy prospered. If there's enough latent potential in the economy, you don't have to go all the way to "100% non-extractive" to tap it. Just less extractive will get you some of the gains. Now, I grant you that the results are not a good definition of "extractive". But "abolition or severe limits on private property, state-run enterprises, excessive regulation and taxation" are in fact a reasonably good definition.
  - asdfman123 6y ago
    I'm just anticipating the ideological implications there: once again conflating reasonable goventment solutions with radical socialism. Obviously authoritarianism is bad, especially when it does not care for economic realities, but does that really mean anything for western democracies?
    - AnimalMuppet 6y ago
      It means: Don't become authoritarian. Don't ignore economic realities. That applies to both the government, and (since it's a democracy) to the people.
djaouen 6y ago
Luck?
- ghaff 6y ago
  While sort of a throwaway comment, you don't really deserve all the downvotes. Once you get beyond broad historical trends, some of which were geographically pre-ordained, there's a lot which looks a lot like random confluence of events.
ardit33 6y ago
"Te running of the country by few elites that eventually become corrupt/extractive". Is one of the reasons... but not THE reason. Otherwise Singapore should be poor, but they are not. often, it can be explained with the inability of a government to govern, and individuals are left to their own devices.... Favelas are a demonstration of it (lack of proper housing policy and urban organization by the government). Also a lot of the chaos of post Communist Europe.... You can have the greatest laws in the book, but if you can't effectively enforce them, or govern, then it doesn't matter. Corrupt elites just accelerate poverty, but they are not the only cause of it.
- dwheeler 6y ago
  I'd love to believe the premise of this article, but this seems easily falsified by the real world. China has become rich, and is becoming more so, and it is controlled by a small elite.
aabeshou 6y ago
how about the history of imperialism where some countries came in, exploited the local population and their natural resources, and reaped the benefits of historical, compounding wealth? how about the history of how those wealthy countries then turned around and squashed democratic uprisings in order to install oppressive, right-wing regimes that were more friendly to their interests? how about the history of trade sanctions which further cripple countries which are already disempowered and exploited? these social darwinist explanations always seem to miss the simple facts of history
- asdf21 6y ago
  Have you tested this hypothesis? It seems that South Africa is wealthier than neighbors, for instance.
  - ianleeclark 6y ago
    The cape was literally a restocking hub for the global trade hegemon (Dutch) and later served similar purposes for the following hegemon (British). Of course it had higher rates of capital accumulation. This was seen even into the 60s
  - aabeshou 6y ago
    South Africa has the single worst inequality in the world [0], and up until very recently there was apartheid ruled by the descendents of dutch colonizers. This still fits the pattern of imperialists coming in, and enriching themselves at the expense of local populations. It's just that in this case the occupying population hung around permanently. But they're still hoarding the wealth. [0] https://www.cnn.com/2019/05/07/africa/south-africa-elections-inequality-intl/index.html https://www.cnn.com/2019/05/07/africa/south-africa-elections...
    - asdf21 6y ago
      By hording the wealth you mean drastically increasing GDP?
  - addicted 6y ago
flerchin 6y ago
At this point it appears to be birth control, and cultural acceptance of birth control.
- troughway 6y ago
  Are you going to elaborate or just leave it at that?
frodetb 6y ago
> Plainly put, poor countries are poor because those that have power make choices that create poverty. Simple enough, almost sounds tautological. If truly all the causes listed in the beginning of the article don't amount to an explanation, then there's little left to point at than the governing powers. I'd like some more proof before I'm convinced that inclusivity in government is _the_ smoking gun, but I don't think it is controversial to say "democracy good."
bjt2n3904 6y ago
This... article seems to use the phrase "inclusive political and economic institutions" a lot. To the point where it doesn't mean anything.
CapitalistCartr 6y ago
The United States inherited a great deal of political history from Britain that gave us a huge boost. As Newton said, "If I see so far, it's because I stand on the shoulders of giants." We Americans got that advantage. And Britain didn't come by it easily: from the Norman invasion to the American rebellion were 11 civil wars. Representative governance instead of dictatorship was hard-fought. We like to think we alone fought for our system, but that's drastically untrue.
- Hokusai 6y ago
  Also many scientist flying Europe during and post WWII brought the best world technology to the USA. And not less important is the fact that factories and other means of production where unaffected meanwhile Europe was bombarded flat. Giving the USA an industrial advantage. And further investments in education and infrastructure shaped the future pushed by open democratic values.
- ww520 6y ago
  France, too. Lots of the democratic ideas are from France. E.g. The Social Contract by Rousseau.
  - deleted 6y ago
    [deleted]
nine_zeros 6y ago
At least in the case of India, colonization ensured that the local population was decimated in terms of access to education and industrial revolution for nearly 200 years. After colonization ended, while they inherited British institutions, arbitrary boundaries (which affect them even today) and a closed economy (coming from protectionism and fear of western colonizers) ensured that they couldn't rise from the ashes as fast as other Asian countries.
golemiprague 6y ago
Looks to me like those 1960s scientists had more common sense realising that there is no one reason but rather many different parameters
pmoriarty 6y ago
The US, already well on its way up in the 20th Century, was spared during WW1 and WW2, while many other countries were devastated. It also had massive resources, nearly endless open land compared to Europe, oceans on two sides to guard it from any credible threats, and a lack of invaders or civil wars in the 20th Century. The US also used to be a lot more welcoming, and benefited from many talented immigrants, Einstein being perhaps the most well known.
seesawtron 6y ago
Is "inclusive political and economic institutions" always a good strategy? I am not convinced and the article doesn't point to any solid evidence to support this claim rather portrays a representative picture. Does "rich nations" imply nations where the elite hold huge amount of capital or does it refer to nations where an average citizen lives in prosperity? The article doesn't reflect on the comarison of ecomomic divide in the nations. The article's claim that "exclusive" institutions concentrate power in the hands of the few elite and hence the nations end up being poor. THe US could be considered a rich nation with "inclusive" institutions and yet there exists the concentration of power and wealth to the few. These correlations argument of very shaky. The Adam Curtis documentaries [0,1] at their core point out the loss of control by the democratic government (elected to serve its people) to the private economic institutions (created to serve the elite). [0] https://youtu.be/fh2cDKyFdyU https://youtu.be/fh2cDKyFdyU [1] https://youtu.be/v-npoz1SgRQ https://youtu.be/v-npoz1SgRQ
dirtyid 6y ago
In a globalized world influenced by a US hyperpower for 60+ years, countries, especially small ones, are allowed to thrive with the beneficence or indifference of powerful countries. Taiwan, S.Korea, Japan all become rich and industrialized via protectionist authoritarians governments supported by US interests and protection umbrella. Opposite for US sanction countries. A lot of EU would not have recovered into wealthy countries postwar without similar US support. Much of the geographic constraints stopped mattering when a unipolar country controls all trade routes and dictates winners and losers. Of course competent local governance determines whether beneficence could translate into long term wealth, and a host of cultural factors determine if interests with benefactors can align long enough for such wealth production systems to emerge, but whether that wealth equitably distributed is another question.
amriksohata 6y ago
Some nations will always be poor, if nations are rich it means their imports are lower than their exports, which means other countries have be the opposite. The whole system is rigged in that way to give the illusion all countries can get richer but in reality even though they can get richer e.g American then China etc, it is like a game of whackamole where another country will suffer somewhere else.

27 points by novaRom 6y ago

ars 6y ago

"Poor countries are poor because they are ruled by narrow elites that organize society for their own benefit at the expense of the citizenry." Seems to me he got cause and effect backwards. The same thing that causes countries to be poor also make them "easy picking" for elites who want to exploit them.

praptak 6y ago
A proper experiment is obviously infeasible but there are countries that a) went from poor to rich and b) have had strong citizenry even back when they were poor.
jsperson 6y ago
This is why I am skeptical about the long term threat/success of China. With Xi now effectively chairman for life he will put more energy into maintaining his position than governing.
- mc32 6y ago
  Unfortunately for the governed there is a lot left to drain out of their reservoir. Take Venezuela for example. It’s been going on 20 years too long but it keeps going.
  - jsperson 6y ago
    On the flip side - it also means that if we have a bad president or two in the United States, we’ll still probably be ok. With multiple branches of government there’s only so much damage that can be done in 4/8 years.
    - karmakaze 6y ago
      I used to think that. Then this term happened. Or I still do but severely underestimated "only so much damage".
- ByteJockey 6y ago
  Personally I think it's less about how much energy is put into maintaining your position, and more about how the system adapts to the presence of an individual. When an individual is in power for an extended period of time, the system adapts to them being there. The longer they're there, the more the system comes to rely on them being there instead of an arbitrary person being in that position. This, I think, is one of the reasons that the transition period in long running monarchies is so dangerous. All of the plans that relied on the specific qualities of the former leader just went out the window.
AnimalMuppet 6y ago
And what, in your view, is it that causes countries to be poor?
DylanDmitri 6y ago
"Why Nations Fail" is an excellent book on this topic. There's a cycle between poverty and exploitation, and the book does an excellent job detailing many historical examples.

unoti 6y ago

Political institutions are part of it, but probably not the most important part. The excellent book Guns, Germs, and Steel[1] lays out very well researched reasons for the disparities we see today. Highly recommended reading! Spoiler: What kind of crops and livestock you have paired to your climate over history is a big factor (number of calories you can raise per acre). What kind of livestock you had or didn't have also relates to what kinds of diseases might wipe you out (see Aztecs). And what kinds of raw materials you have available impacts what kind of commerce you can engage in. These factors over time have a huge impact on how civilizations advanced relative to each other. There's a summary of the book on Wikipedia[2], along with some interesting criticisms. [1] https://www.amazon.com/Guns-Germs-Steel-Fates-Societies/dp/0393354326 https://www.amazon.com/Guns-Germs-Steel-Fates-Societies/dp/0... [2] https://en.wikipedia.org/wiki/Guns,_Germs,_and_Steel https://en.wikipedia.org/wiki/Guns,_Germs,_and_Steel

ghaff 6y ago
I'd add Why the West Rules for Now by Ian Morris. https://en.wikipedia.org/wiki/Why_the_West_Rules%E2%80%94For_Now https://en.wikipedia.org/wiki/Why_the_West_Rules%E2%80%94For... It makes the (to me) convincing argument that geographic determinism, while important, doesn't really explain why the western core given that the eastern core surpassed the west on many measures after the fall of Rome. (Though it does explain why one of those two cores were probably ordained to win out.) But the western core was in a better situation to exploit the Industrial Revolution which basically made everything before it almost irrelevant. Neither book does much to explain why well-positioned modern states, e.g. Argentina, weren't able to better take advantage of their position and natural resources however.
- lezojeda 6y ago
  In Argentina's case, decades of failing statism and economy intervention mixed with military dictatorships. Inflation rampant since the 40s with around only one decade (1990-1999) with 1 digit inflation. Enterprising in Argentina is an absolute nightmare.
mc32 6y ago
Argentina and Mexico were almost at parity with the US near the turn of the XX cent. Russia (Federation, Empire, Soviet Union) had and have massive natural resources and yet they lag behind many countries that have vastly fewer resources than they do (Japan, SKorea).

asdfman123 6y ago

> The tools of extractive economic institutions include abolition or severe limits on private property, state-run enterprises, excessive regulation and taxation, and more. > Acemoglu and Robinson acknowledge that, under some conditions, growth can occur under extractive political institutions as in the case of China. So I suppose that's not a very good definition of "extractive political institutions," then, is it? Perhaps wealth extraction can even occur in countries that claim to be for free market capitalism.

AnimalMuppet 6y ago
First, "extractive" isn't a binary, it's a continuum. All economies are extractive to some degree - everybody's got taxes. But some are considerably more extractive than others. Second, China. China's economy was very extractive under Mao. (If you don't like the term "extractive", call it "state dominated" instead.) Under Deng, they became less so, and the economy prospered. If there's enough latent potential in the economy, you don't have to go all the way to "100% non-extractive" to tap it. Just less extractive will get you some of the gains. Now, I grant you that the results are not a good definition of "extractive". But "abolition or severe limits on private property, state-run enterprises, excessive regulation and taxation" are in fact a reasonably good definition.
- asdfman123 6y ago
  I'm just anticipating the ideological implications there: once again conflating reasonable goventment solutions with radical socialism. Obviously authoritarianism is bad, especially when it does not care for economic realities, but does that really mean anything for western democracies?
  - AnimalMuppet 6y ago
    It means: Don't become authoritarian. Don't ignore economic realities. That applies to both the government, and (since it's a democracy) to the people.

djaouen 6y ago

Luck?

ghaff 6y ago
While sort of a throwaway comment, you don't really deserve all the downvotes. Once you get beyond broad historical trends, some of which were geographically pre-ordained, there's a lot which looks a lot like random confluence of events.

ardit33 6y ago

"Te running of the country by few elites that eventually become corrupt/extractive". Is one of the reasons... but not THE reason. Otherwise Singapore should be poor, but they are not. often, it can be explained with the inability of a government to govern, and individuals are left to their own devices.... Favelas are a demonstration of it (lack of proper housing policy and urban organization by the government). Also a lot of the chaos of post Communist Europe.... You can have the greatest laws in the book, but if you can't effectively enforce them, or govern, then it doesn't matter. Corrupt elites just accelerate poverty, but they are not the only cause of it.

dwheeler 6y ago
I'd love to believe the premise of this article, but this seems easily falsified by the real world. China has become rich, and is becoming more so, and it is controlled by a small elite.

aabeshou 6y ago

how about the history of imperialism where some countries came in, exploited the local population and their natural resources, and reaped the benefits of historical, compounding wealth? how about the history of how those wealthy countries then turned around and squashed democratic uprisings in order to install oppressive, right-wing regimes that were more friendly to their interests? how about the history of trade sanctions which further cripple countries which are already disempowered and exploited? these social darwinist explanations always seem to miss the simple facts of history

asdf21 6y ago
Have you tested this hypothesis? It seems that South Africa is wealthier than neighbors, for instance.
- ianleeclark 6y ago
  The cape was literally a restocking hub for the global trade hegemon (Dutch) and later served similar purposes for the following hegemon (British). Of course it had higher rates of capital accumulation. This was seen even into the 60s
- aabeshou 6y ago
  South Africa has the single worst inequality in the world [0], and up until very recently there was apartheid ruled by the descendents of dutch colonizers. This still fits the pattern of imperialists coming in, and enriching themselves at the expense of local populations. It's just that in this case the occupying population hung around permanently. But they're still hoarding the wealth. [0] https://www.cnn.com/2019/05/07/africa/south-africa-elections-inequality-intl/index.html https://www.cnn.com/2019/05/07/africa/south-africa-elections...
  - asdf21 6y ago
    By hording the wealth you mean drastically increasing GDP?
- addicted 6y ago

flerchin 6y ago

At this point it appears to be birth control, and cultural acceptance of birth control.

troughway 6y ago
Are you going to elaborate or just leave it at that?

frodetb 6y ago

> Plainly put, poor countries are poor because those that have power make choices that create poverty. Simple enough, almost sounds tautological. If truly all the causes listed in the beginning of the article don't amount to an explanation, then there's little left to point at than the governing powers. I'd like some more proof before I'm convinced that inclusivity in government is _the_ smoking gun, but I don't think it is controversial to say "democracy good."

bjt2n3904 6y ago

This... article seems to use the phrase "inclusive political and economic institutions" a lot. To the point where it doesn't mean anything.

CapitalistCartr 6y ago

The United States inherited a great deal of political history from Britain that gave us a huge boost. As Newton said, "If I see so far, it's because I stand on the shoulders of giants." We Americans got that advantage. And Britain didn't come by it easily: from the Norman invasion to the American rebellion were 11 civil wars. Representative governance instead of dictatorship was hard-fought. We like to think we alone fought for our system, but that's drastically untrue.

Hokusai 6y ago
Also many scientist flying Europe during and post WWII brought the best world technology to the USA. And not less important is the fact that factories and other means of production where unaffected meanwhile Europe was bombarded flat. Giving the USA an industrial advantage. And further investments in education and infrastructure shaped the future pushed by open democratic values.
ww520 6y ago
France, too. Lots of the democratic ideas are from France. E.g. The Social Contract by Rousseau.
- deleted 6y ago
  [deleted]

nine_zeros 6y ago

At least in the case of India, colonization ensured that the local population was decimated in terms of access to education and industrial revolution for nearly 200 years. After colonization ended, while they inherited British institutions, arbitrary boundaries (which affect them even today) and a closed economy (coming from protectionism and fear of western colonizers) ensured that they couldn't rise from the ashes as fast as other Asian countries.

golemiprague 6y ago

Looks to me like those 1960s scientists had more common sense realising that there is no one reason but rather many different parameters

pmoriarty 6y ago

The US, already well on its way up in the 20th Century, was spared during WW1 and WW2, while many other countries were devastated. It also had massive resources, nearly endless open land compared to Europe, oceans on two sides to guard it from any credible threats, and a lack of invaders or civil wars in the 20th Century. The US also used to be a lot more welcoming, and benefited from many talented immigrants, Einstein being perhaps the most well known.

seesawtron 6y ago

Is "inclusive political and economic institutions" always a good strategy? I am not convinced and the article doesn't point to any solid evidence to support this claim rather portrays a representative picture. Does "rich nations" imply nations where the elite hold huge amount of capital or does it refer to nations where an average citizen lives in prosperity? The article doesn't reflect on the comarison of ecomomic divide in the nations. The article's claim that "exclusive" institutions concentrate power in the hands of the few elite and hence the nations end up being poor. THe US could be considered a rich nation with "inclusive" institutions and yet there exists the concentration of power and wealth to the few. These correlations argument of very shaky. The Adam Curtis documentaries [0,1] at their core point out the loss of control by the democratic government (elected to serve its people) to the private economic institutions (created to serve the elite). [0] https://youtu.be/fh2cDKyFdyU https://youtu.be/fh2cDKyFdyU [1] https://youtu.be/v-npoz1SgRQ https://youtu.be/v-npoz1SgRQ

dirtyid 6y ago

In a globalized world influenced by a US hyperpower for 60+ years, countries, especially small ones, are allowed to thrive with the beneficence or indifference of powerful countries. Taiwan, S.Korea, Japan all become rich and industrialized via protectionist authoritarians governments supported by US interests and protection umbrella. Opposite for US sanction countries. A lot of EU would not have recovered into wealthy countries postwar without similar US support. Much of the geographic constraints stopped mattering when a unipolar country controls all trade routes and dictates winners and losers. Of course competent local governance determines whether beneficence could translate into long term wealth, and a host of cultural factors determine if interests with benefactors can align long enough for such wealth production systems to emerge, but whether that wealth equitably distributed is another question.

amriksohata 6y ago

Some nations will always be poor, if nations are rich it means their imports are lower than their exports, which means other countries have be the opposite. The whole system is rigged in that way to give the illusion all countries can get richer but in reality even though they can get richer e.g American then China etc, it is like a game of whackamole where another country will suffer somewhere else.