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Why Isn’t the Whole World Rich?

• version_five 4y ago
  Thermodynamics. You can only extract work from a gradient
  • greenbit 4y ago
    Nah, it's gravity. Money attracts money. It coalesces into dense lumps, a few thin clouds of gas, and a whole lot of very empty space.
    • version_five 4y ago
      Money is basically the ability to get other people to do stuff for you. There have to be other people around worse off than you for that to work. Dense clumps of rich people are surrounded by people that will take their money to do stuff
    • imtringued 4y ago
      That would imply money doesn't result in a nash equilibrium and that it is not very neutral.
  • dusted 4y ago
    I'm with you on this.. There can only be rich countries if there are poor countries.. Otherwise there would just be.. countries.. One of the reasons that the standard of living is so high in rich countries, is because we're paying poor countries to do the work + pollution, if they had as much money as rich countries, they'd be unwilling to do that work/polution for that price, and the "true" price of the work would reveal itself.. In Denmark, the vast majority of what's consumed is not produced in Denmark, that'd be too expensive and nobody would afford it.. Being rich is not about how much money you have.. it's about how much MORE money you have than someone else.
    • JoeAltmaier 4y ago
      Easy to say from an easy chair in a rich country. But that paying poor countries to do work, that's their current route out of poor. To take that away over some social-action-theatre objection is just cruel and thoughtless. From one point of view.
      • dusted 4y ago
        I'm not arguing that it's a good, just or right thing.. Only that it is. (this is not an argument for or against the status quo, only a statement of my interpretation of it) I'm also not suggesting any course of action (including inaction). I'm just saying that the way things are currently set up, it looks like rich countries are rich, but in fact, they're only rich in difference of wealth, that is, they're only able to sustain their high standards of living by the fact that other countries are substantially worse off, and so will provide them with goods and services at rates far lower than they themselves would be able or willing to work for. To be purely rich, a country would be able to maintain such standard of living entirely from using its own goods and services, which is rarely the case.. Except for the ultra-wealthy, most people in "rich" countries cannot actually afford to exclusively consume the goods and services produced by their peers.
        • imtringued 4y ago
          There are people who have been cocoa farmers their entire lives and they have never tasted chocolate. Kind of absurd.
      • serverholic 4y ago
        This seems like an emotional reaction to a very valid point. If everyone on earth had fair wages things would be far more expensive. Part of what makes your phone affordable is cheap labor in terrible conditions. What happens when those countries start to be less poor? The answer is that the rich countries will find another group of poor people to make their stuff. This is likely why rich people, like Bill Gates, are obsessed with Africa.
• api 4y ago
  Make the question smaller. Why isn’t all of America equally rich? Why aren’t all neighborhoods in your city equally rich? The answers are similar: historical path dependence, founder effects, compounding network effects, and fortunate or unfortunate accidents.
  • bumby 4y ago
    Much of the article focuses on institutions. So how would you characterize the institutions in poorer America as different? How, for example, does the historical dependency path manifest itself in the institutions of poor America?
  • awb 4y ago
    + Nature
    • bergenty 4y ago
      I don’t know if I can fully agree. India and China made up 60% of the world GDP for over 2000 years of history. Does their decline into poverty mean there was a genetic change? Both those countries are now growing at very fast rate, has there been a change again?
    • api 4y ago
      It’s a factor and I think those that argue against it overshoot their case by completely dismissing it altogether. Yet to argue that it’s a large factor you have to explain all the many cases of genetically almost identical populations with vastly different outcomes across either space or time. By time I mean historically. Europe was a lot poorer than much of the Muslim world and the Orient until the enlightenment and the industrial age. Did Europeans suddenly mutate into a higher intelligence population? Russia has been in steady decline since probably 1980 or so. Their ethnic makeup has not changed to any significant degree. China exploded in the past 30 years. Probably even less genetic change there. North and South Korea from space is the most dramatic example. That has an obvious political cause but the genes are about identical. The variance in societal scale outcome just does not map well to human genetics, revealing it as a minor rather than a major factor.
• Double_a_92 4y ago
  Because eventually someone needs to do the work to provide the goods and services that you could buy with your wealth.
• revskill 4y ago
  Because of inheritance.
• mlatu 4y ago
  the answer is statism. to easy. next!
  • JKCalhoun 4y ago
    Or not enough "statism". I read "Childhood's End" by Arthur C. Clarke when I was young. If you read it: the aliens that take over and control the Earth very quickly make production so efficient, global that the work week is reduced to a day or two. No starvation, everyone has a home, comforts.
    • mlatu 4y ago
      science fiction is easy. the reality would probably look very different. in my opinion statism is at fault because it is the manifestation of "let us, here, very locally, protect each others shit, while exploiting all the others" this thought, or concept of "us and them", (for some it starts even more locally: "mine/yours") divides ppl and funnels assets to those that can afford them. average downvoter "but mlatu, dont you own a car? what if someone took it from you?" me:"in this society? that would be theft, and i'd have to call the cops and my insurance company because im still paying that rustbowl off! but imagine instead, if i could trust that there was a different car available so i still could get home, i wouldnt mind it, or if i could trust that there was another as-good solution to getting home as me driving my car there, let me use it!" society could be based on sharing instead of on hoarding... one if these days ill have the time to develop some societal simulation model or something... "owning property" used to be very important, when there were only a couple hundred million of us on this rock, but i believe, the longer we remain on-planet, the more important it gets to overhaul that in favor of equaly sharing all resources. all in favour of fully automated luxury gay space communism say "where's mah figs?"
• newyankee 4y ago
  One reason is how much ever we try to disagree, the socio economic construct is still a zero sum game with an ever increasing pie. People who argue otherwise point to the size of the pie without practically ever stating what those in difficult positions can realistically do to get more of it. Other reasons are that honestly there is not much "real work" to be done so we can argue that a very small % of existing population suffices for maintaining the system. The tiny elite (countries, billionares, intellectuals) essentially work towards maintaining their control over the system and resources.
  • mcv 4y ago
    But if the pie increases, it's not really a zero sum game, is it?
    • snidane 4y ago
      Entities without competition inflate prices until they capture all the extra new pie. You receive increase in salary from your boss one year and next year it gets eaten away by monopolies like healthcare, education, housing and landlords.
      • brutusborn 4y ago
        Rent seeking may be zero sum, but the economy as a whole not. If we banned rent seeking the economy would likely grow faster. You could argue that's changing the game, but the economy is a weird one in that changing the game is part of the game.
        • zozbot234 4y ago
          We do ban a lot of rent seeking, though. For example, theft and fraud are rent-seeking activities. So the sorts of rent seeking that you still see are the ones that are hardest to ban.
        • imtringued 4y ago
          Banning rent seeking doesn't work. Christianity tried banning interest and it just causes non Christians to offer lending services which then results in xenophobia. Interest payments partially derive from the liquidity services provided by market participants (think long opening hours and storing products ahead of time). Money effectively becomes a public institution where people voluntarily give it value in the form of liquidity services. That public institution is then kept in private hands who lend out money and then get to market these liquidity services as if they provided the public institution themselves. Basically someone else does the work and you get to benefit. The answer to this problem is a demurrage fee on cash. Banks can then compete by offering the ideal negative rate that is in proportion to the liquidity premium. Banks can then use this fee to pay for liquidity services. Is anyone doing this? No and I don't think it will happen in the next 30 years.
• awb 4y ago
  > Yet even though extreme poverty has fallen, in 2018 about 80% of the world population still had material living standards less than one-third of that in the United States. That’s it right there. If wealth is relative then you can’t possibly create a system that will result in equality of outcome since we’re all born unique.
  • aflag 4y ago
    • throwaway294566 4y ago
      You are trying to put a racist spin on something that is simply a matter of time and circumstances: You cannot instantly, just by declaring it to be so, have technology, infrastructure, efficient agriculture. You need to start where you are and continuously improve the status quo in your country. That takes time. How much depends on things like corruption, means, climate, openness for change, local resources and topography. And of course there can be setbacks, e.g. if the aforementioned circumstances change. TFA has some nice graphs on that, where you can e.g. see the almost parallel development of USA, Germany and South Korea, just with different starting points in time. Otoh, there is another graph, where cirumstances changed for the worse, taking development down again.
      • aflag 4y ago
        • throwaway294566 4y ago
          A person's behavior and its abilities are determined by genetics ("nature") or family/society/circumstances ("nurture") or some ratio of mixture of both. Current political sensibilities prohibit talking about genetic aspects and demand that all, or at least as much as possible is ascribed to family/society/circumstances. Ascribing traits, especially negative ones, to genetics, is commonly called racism. However, for the given discussion, it is unnecessary to dip into the nature/nurture debate and expose oneself to accusations of racism: People just are as they are, different in certain ways, which leads to differences in economic outcomes and therefore being more or less rich. Uniqueness isn't really a criterion in most cases, except sometimes if a society ruled by a uniquely crazy dictator. Usually, a lot of people, the society as a whole or at least a certain ruling class, determines the direction through their behavior. E.g. corruption, which is strongly correlated with bad economic outcomes, is always a problem of the society as a whole. That crazy dictator on top isn't involved in most of the corrupt interactions that happen.
• jongjong 4y ago
  Simple answer; people from rich countries will use flaws in the political structures of certain other countries to install corrupt politicians; these politicians are then going to work for the interests of their rich foreign patrons and against the interests of their own people (for kickbacks/self-enrichment). The corrupt politicians will do things like saddle their people with significant public debts (which will force the people to pay ongoing interest to rich countries; through tax and inflation). In the private sector, they will award big, generous contracts to foreign companies, suppress people's wages to allow foreign corporations to maximize their profits, allow child labor, sweat shops, etc... That's why, as a regular citizen, it's vitally important to live in a country which has reliable, honest politicians. Otherwise you'll be paying for their corruption through taxes, inflation, wage suppression and loss of opportunities. I can recommend David Graeber's book "Debt: The First 5000 Years"; it makes a strong case about the immorality of international debt.
  • stelonix 4y ago
    This, precisely. Basically, suffering and low-HDI is exported to developing nations, just like pollution was exported by moving manufacturing to these places. Since big players do not have to abide by international law and can pretend to care about human rights through virtue-signaling, we have whole continents with gargantuan inequalities. Any attempt by these abused nations to get together, be it through free-trade or other agreements, will be attacked by the elites in developed nations, either through their foreign policies (economic warfare) or under the hood by espionage/sabotage.
  • realgeniushere 4y ago
    So I agree it has to do with bad governance. But you deflect all blame away from the people in those poorly governed country, instead blaming wealthy people in other countries. I’ll say though, the worst thing the West has done to the third world is insist on democracy. Peasants don’t know what they need government to do, and the political classes in those countries don’t have the maturity to steer them.
    • jongjong 4y ago
• jdthedisciple 4y ago
  My personal (purposely incomplete!) answer is because the whole world doesn't deserve to be rich. Imagine this scenario to help understand why: Let's say the top richest people gave away so much money that every person on earth was a millionare. What would happen? People wouldn't change their spending and other habits, in fact they would buy more useless stuff. Prices would thus rise and rise until they matched the new million-fold buying power. (Think about this: Would you keep your pretzels at $0.50 if you knew everyone was a millionare? Ofc not.) And then? Then we would be right back to where we started: Most people would be just as poor as before, and the rich would be just as rich as before. To the downvoters: I'm genuinely interested in your serious rebuttals of my hypothesized scenario.
  • dr-detroit 4y ago
  • actionfromafar 4y ago
    There are several studies which have shown that cash transplants have a lasting beneficial effect on poverty.
    • jdthedisciple 4y ago
      That must be to a very limited degree to the point where you can't extrapolate the effect to my hypothesized scenario. In fact there is evidence in support of my thesis: Most lottery winners lose all their won money within a few years.
      • RugnirViking 4y ago
        That's a myth, which stemmed from a misquote of NEFE [1]. Most research shows that this isn't really true. https://time.com/5427275/lottery-winning-happiness-debunked/ https://time.com/5427275/lottery-winning-happiness-debunked/ [1] https://www.nefe.org/news/2018/01/research-statistic-on-financial-windfalls-and-bankruptcy.aspx https://www.nefe.org/news/2018/01/research-statistic-on-fina...
  • 4y ago
• pydry 4y ago
  The formula is pretty simple. The US not only allowed South Korea to pursue export oriented industrialization, it actively encouraged it. It saw South Korea as a military bulwark against the Soviet Union. Why can't every country follow in its footsteps? Well, some did and were encouraged for similar reasons. Taiwan, Japan, etc. However, without preferential access to the markets of the world's richest nation(s), export oriented industrialization becomes very difficult if not impossible. You cant incrementally build up your car export industry if you can't sell your cars. This is, broadly speaking, why we have a Daewoo but no equivalent for, say, Ethiopia. The US generally prefers not to encourage EOI. It usually prefers to stripmine poor 3rd world countries and sell luxuries to their elites instead.
  • mathverse 4y ago
    It's a combination of a lot of factors. Access to a rich market is one thing but protecting your own markets against much stronger competition is another. South Korea was a mercantilist nation and it protected its core industries in the early stages. That's why companies in traditional industries (construction,banking,insurance,food etc etc) in Korea are still mostly Korean when in Eastern Europe they are German,French,Italian etc etc
    • pydry 4y ago
      >protecting your own marketing against much stronger competition is another. That's the whole point. Most countries that do this are locked out of rich markets. They're said to be competing "unfairly". They know mercantilism works they just can't practice it without being slapped with countervailing tariffs. It was US policy both to allow and encourage mercantilism for South Korea because that meant it could function as a military bulwark against the communist nations surrounding it.
      • zozbot234 4y ago
        They're not locked out, they just might have to pay retaliatory tariffs. The whole issue is countries that institute such mercantile tariffs in the first place tend to be exactly the ones where elites do not believe in export-driven growth, and pursue failing top-down schemes that increase their own petty influence within those same countries.
• worldsavior 4y ago
  Because no one will work to make people rich.
• mathverse 4y ago
  South Korea's success also stemmed from centrally-planned authoritarian regime. Park Chung Hee made it happen because only through economic success can country achieve the necessary status on the world stage. But Park Chung Hee could not have done it alone. It was koreans humility and willingness to be guided that achieved this dream. For example if we compare the generation that built Korea and those from Eastern European countries there is a stark difference. Koreans believed that through hard work and capitalism and by generating wealth they will increase the living standards. In EE countries this generation despite being as uneducated as the koreans believed that the wealth "exists" and it should be distributed by the state and that they work enough in honest jobs. They never understood how wealth generation works.
  • klibertp 4y ago
    > They never understood how wealth generation works. From your description, neither did Koreans. You say they "believed" and that they were "willing to be guided". It was exactly the same behind the Iron Curtain. People believed in the vision of their leaders and were willing to follow them along the path they wanted to take. The only difference is that the vision of communist leaders was less practical than that of similarly authoritarian but capitalist regime. The funny thing is that centrally-planed economy might have become a more practical choice now due to IT revolution. I think it will pay off to look at what happens in China in the next decade.
• nivenkos 4y ago
  A strange example since back then South Korea was a dictatorship that massacred over 100,000 of its own citizens: https://en.wikipedia.org/wiki/Bodo_League_massacre https://en.wikipedia.org/wiki/Bodo_League_massacre https://en.wikipedia.org/wiki/Jeju_uprising https://en.wikipedia.org/wiki/Jeju_uprising https://en.wikipedia.org/wiki/December_massacres https://en.wikipedia.org/wiki/December_massacres
  • rejectfinite 4y ago
    Okay and? Look at Samsung phones. They so good!
    • durnygbur 4y ago
      This was the only way so now we all can have expensive, oversized, slippery, scratch and crack attracting spy phones in our pockets.
    • mdp2021 4y ago
      Neither the original post nor this answer make clear sense in the context. The original post seems to relate that "South Korea went from 6% of the GDP in the USA in 1953 to that of the UK in 2020" with a history of dictatorship, while the point of the article is exactly the - noted - "strangeness" of the results. The above reply mentions some quality in products of Samsung while the article is explicitly about the difficulty of understanding why «Samsung, Hyundai or LG» became what they ended up to be. (And the first half dozen posts seemed to try and throw an answer to the title, as if its closing question mark made it an open quiz.) We need more clarity.
      • mathverse 4y ago
        South Korea tried their take on Wirtschaftswunder. They had a model and they knew how to achieve it through propping their industries. To some extent you could say they were state owned companies as they were intentionally directed to do certain things.
        • 4y ago
• horseAMcharlie 4y ago
  Wealth is unevenly distributed because the acquisition of wealth by agents is (and has been) unevenly distributed. What property do all extant technologies possess (that some, yet undeveloped technologies, may not,) that has ensured that none of them have been able to flatten that distribution? Is it comprehensibility?
• throwaway294566 4y ago
  Because "rich", in many definitions, is a moving goalpost. If you define rich and poor as related to some global average, inevitable differences (we are not a Borg collective) will always produce some rich and poor people. If you, however, define "rich" and "poor" as related to a fixed criterion based on the necessities of life, like "will/won't suffer from starvation during their >60 year average lifespan" or "child mortality <2%": then the world is steadily improving and humanity has never been richer.
• rexreed 4y ago
  If everyone was rich, no one would be rich. If everyone was above average, no one would be above average.
  • mdp2021 4y ago
    If everybody could afford decent food, they would - period. There is no relativism involved in this context.
• JoeAltmaier 4y ago
  Some of the reason must include culture. Innovation, investment, risktaking are all subject to local acceptable values. Some places they thrive. For instance bribe-taking, strong-man-rule, abuse of power (from dog-catcher to president) are not correlated with those things.
• ralusek 4y ago
  At least in part due to unavoidable scarcity. The California coastline is a beautiful place. More people want to live there than can physically live there. Whoever gets to live there, by whatever means, has something that many people want. That's wealth, and it cannot be equally distributed. If you were to start the world from scratch, give everyone $1000, hierarchies would still immediately develop. People have different affinities, skills, people encounter different ideas at different times, happen to meet people or live in a certain place during a certain movement. As long as people are free to exchange their resources, they will not end up equally distributed. And even if we're talking about a post-scarcity Star Trek situation with replicators and holodecks, you still would never eliminate a hierarchy of value. Maybe everyone can live in on the California coastline in their holodeck, but the actual California coastline is still scarce, and people will still prize it. Or maybe Captain Picard hand carves a chair. It can be replicated exactly, but there will be a certain value to having the actual chair that he carved. We're already seeing this phenomenon in a world with highly efficient and advanced manufacturing. We pay a premium for things that are hand made, simply for the fact that the process that produced the thing is inherently limited. We'll never escape scarcity, and this is just one of the things that will always maintain a hierarchy of value.
• zozbot234 4y ago
  The more interesting question is "Why isn't the whole world poor?" Poverty is the natural state of society, wealth is an exception.
  • postalrat 4y ago
    Poverty is the natural state of which societies? All of them?
    • majani 4y ago
      I think he meant to say "poverty is the default state." After all, you are born with nothing, and if you do nothing, you will get nothing.
      • postalrat 4y ago
        What does being born have anything to do with the state of a society? And if you want to go down that road then I'm wondering why we aren't considering before you are born. Or that when you are born you typically have your parents, siblings, etc. Not nothing.
    • aidenn0 4y ago
      Agrarian societies are historically composed of nearly all subsistence farmers. The industrial revolution changed that, but (unless you agree with Marx) it still doesn't seem like a foregone conclusion that "society" receives the wealth rather than it being concentrated in a few places.
  • mdp2021 4y ago
    The title of the submission stands for "Why have not we managed to obtain a codified body of solutions from success stories". And for "why we instead are beyond poverty", that is a most peculiar question to be asked to Hackers, crafters of tools, engineers, providers of solutions, efficiency augmenters.
• 1995moz 4y ago
  You can make the whole world not poor (and quite a few people not as rich as they are). Solution is simple - allow free movement of goods, services AND people. Perhaps also follow-up with allowing anyone to buy any piece of land anywhere so that rich can also buy up cheaper land (fair deal?). A lot of reasons for conflict (and need to organize around nation states) will stop remaining so important. I guess, one can dream...
  • Thiez 4y ago
    There is a finite amount of (usable) land in the world. If it is all for sale, what is there to stop the rich from buying all of it, and then collecting rent for eternity, becoming ever richer in the process? How is a return to feudalism your dream?
    • commandlinefan 4y ago
      > what is there to stop the rich from buying all of it Isn't that already the case though? I'm not aware of any country that limits how much land a single person can legally own, just prohibitions on which people can own it (i.e. I can't buy land in England because I'm not an English citizen).
  • onos 4y ago
    I’m not against this a priori but I’d expect this to also generate new levels of inequality. As the rich get access to larger playing fields their wealth can grow that much more. Even if true, whether this is bad or not is probably subjective.
  • majani 4y ago
    I used to think this way, but I tempered my belief to say that all poor countries need a brief period of extreme free markets. 50 to 100 years. After that, some regulation will be needed to manage the undesirable tradeoffs of that period
• randomdata 4y ago
  Riches are the result of unrealized social interaction. Meaning that something of value has been given, but something of equal value has not yet been returned. Holding someone's promise to return on that value later is what makes someone rich. Language barriers, political barriers, geographic barriers, etc. often prevent people from establishing the necessary social connections. We've made tremendous strides in reducing those barriers but they have not been eliminated.
• deleted 4y ago
  [deleted]
• FollowingTheDao 4y ago
  Maybe "poverty" is a fake word that was created by people who wanted to sell you something. https://newint.org/features/1992/06/05/poverty/ https://newint.org/features/1992/06/05/poverty/ Think about it. Did people know there was such a think called "poverty" before some people started hoarding everything and not sharing it? That's capitalism! Maybe some people do not mind living in "poverty" and just because you cannot convince them to buy into your false dichotomy does not mea there is something wrong with them. https://panafricanreview.rw/the-invention-of-african-poverty/ https://panafricanreview.rw/the-invention-of-african-poverty...
  • mdp2021 4y ago
    > Did people know there was such a think called "poverty" before Diogenes the Cinic 2400 years ago reportedly lamented hunger (and the absence of shortcuts to curb it, NSFW). That is the poverty contextual to the article.
    • FollowingTheDao 4y ago
      Hunger is not poverty, hunger is hunger. Even wealthy people can be hungry.
      • mdp2021 4y ago
        And even the frugal can be hungry: that is the meaning of poverty in the article, and the analysis is about a solution against it - because whether you embrace the idea of "[GDP-based] growth" or that of "frugality", hunger is a bad state to live in. The point of the article is about "how to have growth", and it is a transposition on different assumptions of "how to have food even though you are frugal". Diogenes was frugal and, reportedly, occasionally sadly aware of his factual poverty.
        • FollowingTheDao 4y ago
          You people love to talk yourselves in circles for no reason. Poverty is a fiction made up by capitalists.
• thewarrior 4y ago
  Simple answer - We don’t have enough energy and raw materials for everyone to live like Western Europeans.
• JohnClark1337 4y ago
• adamgordonbell 4y ago
  Because Richness is a positional good. Why isn't everyone above average?
• adam_arthur 4y ago
  It’s simple. Countries that adopt competitive and capitalist oriented markets do well, those that don’t, don’t. Populist driven economic policies have failed over and over again. How many centuries of history is necessary for people to understand this?
  • Seb-C 4y ago
    Fundamentally, the more value you create, the richer you become. If you take two equal cave-men, and one builds a house and start farming stuff and the other not, then suddenly you have one rich that possesses all the value in the world, and one poor guy that has nothing. There is nothing wrong in this dis-balance, it's just natural. The rich one did not steal from the other and does not owe him anything. So the right question is "What prevents the other caveman from creating value?". Historically it was access to resources, how the climate favored access to food, etc... But now that science and technologies can do wonders, we are indeed often left with political barriers to the development.
• transfire 4y ago
  Until smart robots are ubiquitous, it is not possible. To be rich is to have power over the poor, so they do and make things for you.
  • mdp2021 4y ago
    The article refers to "rich" as "beyond the unsatisfied need for food, water, sanitation, health, shelter, education and information", then as GDP (PPP, presumably). The proposed idea would have the article state that South Korea etc. progressed as they did because they had others work for them. Were this the case, it would have to be defended through some good evidence - which Dietrich Vollrath will be happy to receive, by the way, since the article is about "How come we could not identify a recipe".
• FollowingTheDao 4y ago
  South Korea succeeded succeed they did not get involved with the IMF. The IMF creates poverty. https://www.e-ir.info/2013/03/16/why-did-south-korea-grow-rich-c-1960-1985/ https://www.e-ir.info/2013/03/16/why-did-south-korea-grow-ri... Entry by multinational organisations was restricted as a means of maintaining its independence. South Korea also avoided ‘debt for equity traps’ when undergoing International Monetary Fund (IMF) stabilization policies in response to the debt crisis in the 1970s.
• asimpleexample 4y ago
  The world runs on debt. You need people/countries in debt in order for the system to operate. Here is an example of a country which tried to escape it and didn't fare well. It might also have had something to do with it being socialist. https://www.washingtonpost.com/archive/politics/1989/04/14/debts-paid-romania-says/89557c5f-9f4d-4810-8e15-91538f134a3f/ https://www.washingtonpost.com/archive/politics/1989/04/14/d... https://en.wikipedia.org/wiki/Foreign_debt_of_the_Socialist_Republic_of_Romania https://en.wikipedia.org/wiki/Foreign_debt_of_the_Socialist_...
  • nickpp 4y ago
    It might also have had something to do with having a planned economy unable to fulfil the most basic of the population needs, from food to toilet paper. Rather shocking for a country that used to be Europe's wheat exporter before installation of communism and Russian-controlled puppet regimes.
• nickpp 4y ago
  Free Markets - the biggest wealth creation engine known to man. The most impressive and amazing reversal of fortune I've personally lived through was the switch from planned economy to free markets which took place in Eastern Europe after the fall of communism. You could even predict the degree of improvement or the trajectory of a country by the percent of the free market reforms vs protectionism left in place. Of course, free markets require rule of law, so countries with a justice system controlled by an aristocratic class, clergy, dictator or political class will fail to acquire said free markets. And reversely, the more populist politicians will get socialist policies voted through, policies which control, retard and corrupt the markets - the more their countries will slow down and be left behind. Case to the point - most Western European countries - after becoming incredibly wealthy after starting from scratch at the end of WWII to being left behind by the IT/computer revolution and becoming dependent on the cheap energy provided by a malevolent, war-mongering fading ex-superpower. But why are free markets such an amazing success? Because they're the only mechanism which aligns and harness the humans' natural individual desire to improve one's station to drive and fuel the improvement of the whole society. A simple concept like "if each individual is allowed to decide and do whatever is best for her (and keep most of the result) then everybody will benefit" became such an subversive idea that dictators everywhere are still trying their best to extinguish it.
  • mdp2021 4y ago
    > to being left behind by the IT/computer revolution And you suppose it happened because of internal market pollution?
    • nickpp 4y ago
      Labor market in Western Europe became so corrupted by leftist policies after the mid-20th century that it became basically anti-business. This affected startups the most, since businesses are most vulnerable in their startup phase. And the IT industry (unlike other old industries) was built almost exclusively by startups... Current idiotic policies (GDPR, USB-C charging) are just nails in the coffin on the inexistent European IT industry. The second necessary component was capital. Financial markets in Europe were heavily regulated and taxed, with investing and especially angel investing actively discouraged. The third component: universities were available in Europe as well. But without the first two parts the best and brightest europeans went to Silicon Valley to help build the US IT industry. Because the immigration policy (the final component) was significantly more open in the USA as well...
• emanuer 4y ago
  For anyone interested in this topic, I can wholeheartedly recommend the book: "The WEIRDest People in the World" by Joseph Henrich. The book provieds a beautifully constructed framework to understand culture and its effect on psychological development, as well as economic development. 1. In the book, the author argues that innovation rates of countries correlate positively with the psychological dimension of "individualism". (FIGURE 13.5) 2. The the dissolution of strong kinship ties correlates significantly with high economic growth. An argument the author repeats in his paper from 2022 [1] My personal opinion is: gaining wealth is not a zero-sum-game, but a — the more participants the bigger the pie gets — kind of game. I truly believe, if cultures and institutions change, everyone in the world can be wealthy. With "wealthy" I refer to the living-standard North-American or Europeans enjoy. [1] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4200629 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4200629
  • aidenn0 4y ago
    > My personal opinion is: gaining wealth is not a zero-sum-game, but a — the more participants the bigger the pie gets — kind of game. I truly believe, if cultures and institutions change, everyone in the world can be wealthy. With "wealthy" I refer to the living-standard North-American or Europeans enjoy. I'm less convinced. A lot of the improvement to living standards in the west for the past 50 years or so have been a result of shifting labor to countries with lower standards of living. That being said living standards in post-war US is not a bad target and I don't see a physics problem with attaining that.
• rippercushions 4y ago
  What ties together their poster boys of South Korea, Taiwan and Singapore? They all had a baseline of education and decent government (for corporations, anyway), which they used to attract foreign investment (read: money flowing into the country) for industries that employed large amounts of people in roles where they could learn useful skills, kick-starting middle class wealth that could then propel the rest of the economy forward. Most poor countries only have investment in extractive industries (oil, minerals, etc), which employ very few people, and the skills they learn are next to useless for anything else. The next rug up the ladder is places like Cambodia and Bangladesh, where investment goes into labour-intensive but low-tech industries like making clothes, but the government is too corrupt and the people too badly educated for much more. Although Bangladesh, in particular, has been a quiet success story lately, eclipsing India in GDP per capita.
  • bennysonething 4y ago
    Actually there is a simpler explanation: Rule of law Property rights
    • SQueeeeeL 4y ago
      Wait, I didn't realize Ghana was an anarcho communist state!!! I just assumed it was typical stuff like being endlessly marginalized and sold out by the powerful, and their population being treated like oxen by foreign investors, but that also makes sense!
    • imtringued 4y ago
      The article is about how that isn't enough.
  • Leary 4y ago
    They were all part of the Sinosphere?
    • zardo 4y ago
      They were all cold war economic influence battle grounds that saw huge investment from the US.
• incomingpain 4y ago
  Imagine an agrarian low density country. There are no IT professionals in this country. Everyone more or less works for themselves on their homestead. The division of labour and the economies of scale basically dont exist. As this country migrates to inudstrialization, what its really doing is implementing the economy of scale. It's difficult to get going though, if everyone is a poverty farmer, nobody is buying your widget. We have however measured and seen this entire process happen in about 50 years, several times now to huge success. Despite this, people still believe the economy is zero-sum. These Malthusians in their politics believe that for the western world to be rich, requires them to rob the wealth from other countries. Which certainly has some truth to it. This isn't how it works however, you can have a free trade agreement with palestine, but if nobody actually tries to trade goods, buy or sell goods. it doesnt matter. Each side in this trade of goods thinks they are getting a deal, otherwise they wouldnt do it. So we should in essence end up with excess on both sides. If someone selling their goods in palestine to germany has buyers. Then they can invest in producing more of those goods off the same labour hours. BUT we have a problem: https://www.weforum.org/agenda/2018/08/were-living-in-the-age-of-the-zero-sum-economy/ https://www.weforum.org/agenda/2018/08/were-living-in-the-ag... The malthusians, aka world economic forum, believe we are in fact zero sum because there are so many metrics since 1971 showing we are zero-sum. They aren't wrong. So what happened? https://seekingalpha.com/article/4356705-what-went-wrong-in-1971 https://seekingalpha.com/article/4356705-what-went-wrong-in-... So basically what happened is the gold standard broke. In so doing, these fiat currency countries technically lose the ability to tax. Instead of tax, they should be printing the money they spend and NEVER take any debt. When they tax AND print money causing inflation. It's a double tax and removes, paying taxes on taxes on taxes. Basically government is paying for itself, or rather failing to pay for itself by having circular taxation. This however breaks the economy and turns it to zero-sum. This is why you also see everyone promising to lower taxes, if fiat currency without gold standard is going to stay, politicians basically have to reduce taxation to 0. The problem, they aren't doing it. They want to do little kickbacks to their supporters in specific tax deductions only.
• deleted 4y ago
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• Tade0 4y ago
  My country's(Poland) GDP per capita grew 8-9x over the past 30 years. My personal take is that it's not just the political system during this time, but the transition from communism to a market economy that made it happen. The centrally-planned economy back then had interesting features, among them generally full employment and frankly ridiculous expectations regarding the amount of work(at least in terms of hours). All this proved to be fertile ground for a burgeoning hustle culture when people found that their labour can actually amount to something in a market economy. My generation grew up with largely absent parents because in the 90s it was normal to have a side hustle or do overtime on a regular basis. You see this a lot in other countries that were economically successful - with enough people disregarding their health and private life you can really move forward at a rapid pace. I'm conflicted whether this is a good thing really.
  • bergenty 4y ago
    This doesn’t seem accurate. Are you saying Poland had GDP growth rate of more than 30% a year?
    • Tade0 4y ago
      Exponential growth over 30 years to 9x the original value is 7.6%/yr. Real growth was closer to 7x, so 6.7%/yr and indeed similar growth was sustained over a large part of those three decades.
      • bergenty 4y ago
        What does exponential growth mean here?
        • Tade0 4y ago
          The mathematical definition.
  • imtringued 4y ago
    Are you saying that organized production is the precursor to a wealthy market economy? That would mean a lot of text books would have to be rewritten, especially the ones that assume barter out of nowhere and then magically introduce money.
• ajl666 4y ago
• deleted 4y ago
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• LoganDark 4y ago
  > living standards in the poorest countries in the world will eventually catch up to the United States What part of the US? Because we're paying most of our income for a tiny two bedroom apartment and barely have enough money to afford groceries because the government took our SNAP EBT. We're paying almost $200/mo for 25Mbps internet and don't have any other options because the ISP here is a monopoly. Sure we're lucky to have medical insurance, but it only covers everything except dentistry which is ironically what we've needed the most recently. Oh, and medical insurance is a thing you need here. Grass is always greener.
• sam-s 4y ago
  I find it fascinating that no one dares even to mention IQ, either here or in the original article.
  • Ardon 4y ago
    I've been deeply interested in this issue for years, and my impression is that IQ just isn't that strong a lens of analysis. It's incredibly difficult to prove which way the causality goes. A quick example of this: There has yet to be an IQ test (that I'm aware of) that participants can't increase their score in by studying/practicing. This implies that groups with higher IQs may just be unintentionally 'studying' for IQ tests in their education/environment, putting the ball back in the socioeconomic/environmental factors court. The validity of IQ itself remains a hotly debated topic, let alone how that might affect the development of nations. You're much more likely to be productive as a researcher of this topic, I think, by leaving IQ out. Just like this article, and these comments.
• forgotmypw17 4y ago
  I think that the "$2.15 a day" figure is very deceiving. A huge proportion of people around the world live largely without engaging with the currency system at all, so how much money they have is almost irrelevant to their life. They have enough shelter and food and fulfillment from an established way of life that does not include money. So to say that they are in poverty because they don't use it shows at best an ignorance of the diversity of valid and functional lifestyles and cultures.
• leshow 4y ago
  I thought this question was a joke based on the title. Our economic system itself creates inequality between nations. It's in the best interest of wealthy countries to keep developing countries poor so we can continue extractive processes for their resources. I wasn't aware the question had 'vexed economists for decades'. You can say the same of inequality within a country. Wealth accumulates because we have an economic system where the few are able to extract value out of the many and are protected in their position both with prevailing ideology and state power.
  • naikrovek 4y ago
    > It's in the best interest of wealthy countries to keep developing countries poor so we can continue extractive processes for their resources. it really bothers me that people think this is an OK thing to do. We can choose to improve both the importing and exporting countries when these negotiations are set up, but we don't, because it's cheaper to turn people into slaves and drive them into the grave. There are exactly zero people on this planet (or any other) who could convince me that collective altruism would not benefit everyone both immediately and in the long term, yet every single politician or statesman or business owner from any country seem to think that domination is the best option. The amount of suffering that happens in this world because of money just stuns me every time I think about it. We are a garbage species, doomed to self-destruction, because of money and our apparently inextinguishable desire to have more than everyone else. I will never understand the species or the society I was born into.
    • leshow 4y ago
      I sympathize with the sentiment, although I don't blame the issues on a dearth of altruism. If you grew up in the 1400's could you expect widespread equality during feudalism? It doesn't matter how magnanimous a king was, inequality was built into society. The question then becomes, IMO, what sort of economic organization would help solve these issues?
      • naikrovek 4y ago
        there is no economic system which treats people equally, and there never will be, because it is the creation and use of money which turns good people into bad people. money is Aladdin's Lamp; money grants wishes, and no matter who you are or what you have, you will always want more. there will always be a non-zero number of people who want "more" enough that they feel it is ok that others suffer so that it be obtained. humans create economies wherever they go, and they always have. money takes no action on its own, so humans are the problem. we will be our own demise. our end will not be due to a supernova or space aliens or anything outside of our own control. we will destroy ourselves unless we somehow change ourselves enough that Aladdin's Lamp no longer holds sway over our lives. that will not happen for 100,000,000 generations of humanity, if it ever happens. it is in our very being to destroy things or people for personal gain, and everyone who thinks they are entitled to do it will do it. we may never truly fail as a species (though that is definitely within our reach today) but we will not succeed as a species, either. Aladdin's Lamp is always too close.