Some nations are very rich and some are very poor. Anyone who thinks that the fate of millions of human beings is worth caring about should wonder why the one and why the other. A standard answer in social science is exploitation. Rich nations become rich and stay that way by exploiting the poorer ones and keeping them poor. That argument has been very powerful as a political program. It underwrote national liberation movements all over the world. Unfortunately, the general success of those movements have done very little to remedy the problem. That is in part because the exploitation thesis is almost, but not entirely, wrong.
Jared Diamond's Guns, Germs, and Steel, which won a Pulitzer Prize, is the best book I have read on the subject. I will summarize one of Diamond's key arguments. The Americas and Africa are each arranged along a north/south axis. Eurasia, by contrast, has a very long east/west axis. Flora and fauna are adapted to local climates, which makes it fairly easy to move them east and west but rather challenging to move them very far north and south. This made it possible for a lot of productive crops and herds to end up in one place in Eurasia: the Fertile Crescent. A lot of food in one place means a lot of people and a lot of people encouraged the development of sophisticated social and political arrangements. That is why civilization arises where first it did and that is why it arose much later elsewhere.
I admit to being simple minded. I like such explanations because I can understand them and test them. This one seems pretty good. Some conservatives have criticized Diamond because they think he slights the value of good institutions. That this is not what he is up to is evident in a current piece he has in the New York Review of Books. The piece is a review of Why Nations Fail by Daron Acemoglu and James Robinson.
The fence that divides the city of Nogales is part of a natural experiment in organizing human societies. North of the fence lies the American city of Nogales, Arizona; south of it lies the Mexican city of Nogales, Sonora. On the American side, average income and life expectancy are higher, crime and corruption are lower, health and roads are better, and elections are more democratic. Yet the geographic environment is identical on both sides of the fence, and the ethnic makeup of the human population is similar. The reasons for those differences between the two Nogaleses are the differences between the current political and economic institutions of the US and Mexico.
Diamond points out that some national borders are a very robust test of the effect of institutions.
Besides Nogales, examples include the contrasts between North and South Korea and between the former East and West Germany. Many or most economists, including Acemoglu and Robinson, generalize from these examples of bordering countries and deduce that good institutions also explain the differences in wealth between nations that aren't neighbors and that differ greatly in their geographic environments and human populations.
What are good institutions?
Among the good economic institutions that motivate people to become productive are the protection of their private property rights, predictable enforcement of their contracts, opportunities to invest and retain control of their money, control of inflation, and open exchange of currency. For instance, people are motivated to work hard if they have opportunities to invest their earnings profitably, but not if they have few such opportunities or if their earnings or profits are likely to be confiscated.
Diamond shows that the exploitation thesis is not entirely wrong.
Among non-European countries colonized by Europeans during the last five hundred years, those that were initially richer and more advanced tend paradoxically to be poorer today. That's because, in formerly rich countries with dense native populations, such as Peru, Indonesia, and India, Europeans introduced corrupt "extractive" economic institutions, such as forced labor and confiscation of produce, to drain wealth and labor from the natives. (By extractive economic institutions, Acemoglu and Robinson mean practices and policies "designed to extract incomes and wealth from one subset of society [the masses] to benefit a different subset [the governing elite].")
But in formerly poor countries with sparse native populations, such as Costa Rica and Australia, European settlers had to work themselves and developed institutional incentives rewarding work. When the former colonies achieved independence, they variously inherited either the extractive institutions that coerced the masses to produce wealth for dictators and the elite, or else institutions by which the government shared power and gave people incentives to pursue. The extractive institutions retarded economic development, but incentivizing institutions promoted it.
If you are looking to pin a crime on Europe, here is a crime to pin. I would add to this crime the introduction of socialism, which is inherently extractive. When wealth is viewed as a fixed thing, rather than something to be constantly generated, the powerful in a society will always managed to extract most of that fixed thing.
Good institutions are not the whole story. There is a reason why good institutions developed where they did and why it is very difficult to introduce them elsewhere. Geography is a very powerful factor in the history and distribution of economic development.
One of those geographic factors leaps out of a map of the world in Why Nations Fail that depicts national incomes. On that map, both Africa and the Americas resemble peanut butter sandwiches, with thick cores of poor tropical countries squeezed between two thin slices of richer countries in the north and south temperate zones.
In the New World the two north temperate countries (the US and Canada, average incomes respectively $47,390 and $43,270) and the three south temperate countries (Uruguay, Chile, and Argentina, respectively $10,590, $10,120, and $8,620) are all richer—on the average five times richer—than almost all of the intervening seventeen tropical countries of mainland Central and South America (incomes mostly between $1,110 and $6,970). Similarly, mainland Africa is a sandwich of thirty-seven mostly desperately poor tropical countries, flanked by two thin slices each consisting of five modestly affluent or less desperately poor countries in Africa's north and south temperate zones.
Almost all of the world's wealthy nations are found either above or below the tropics. Since there isn't a lot below, that explains the dominion of the "north". What is wrong with the tropics?
Two major factors contribute to the poverty of tropical countries compared to temperate countries: diseases and agricultural productivity. The tropics are notoriously unhealthy. Tropical diseases differ on average from temperate diseases, in several respects. First, there are far more parasitic diseases (such as elephantiasis and schistosomiasis) in tropical areas, because cold temperate winters kill parasite stages outside our bodies, but tropical parasites can thrive outside our bodies all year long. Second, disease vectors, such as mosquitoes and ticks, are far more diverse in tropical than in temperate areas.
Finally, biological characteristics of the responsible microbes have made it easier to develop vaccines against major infectious diseases of temperate areas than against tropical diseases; we still aren't close to a vaccine against malaria, despite billions of dollars invested. Hence tropical diseases impose a huge burden on economies of tropical countries. At any given moment, much of the population is sick and unable to work efficiently.
The climate in the tropics makes you sick. It also makes it harder to grow food.
s for agricultural productivity, it averages lower in tropical than in temperate areas, again for several reasons. First, temperate plants store more energy in parts edible to us humans (such as seeds and tubers) than do tropical plants. Second, diseases borne by insects and other pests reduce crop yields more in the tropics than in the temperate zones, because the pests are more diverse and survive better year-round in tropical than in temperate areas. Third, glaciers repeatedly advanced and retreated over temperate areas, creating young nutrient-rich soils. Tropical lowland areas haven't been glaciated and hence tend to have older soils, leached of their nutrients by rain for thousands of years. (Young fertile volcanic and alluvial soils are exceptions.) Fourth, the higher average rainfall of tropical than of temperate areas results in more nutrients being leached out of the soil by rain.
Finally, higher tropical temperatures cause dead leaves and other organic matter falling to the ground to be broken down quickly by microbes and other organisms, releasing their nutrients to be leached away. Hence in temperate areas soil fertility is on average higher, crop losses to pests is lower, and agricultural productivity higher than in tropical areas. That's why Argentina in South America's south temperate zone, despite its conspicuous lack (for most of its history) of the good institutions praised by economists, is the leading food exporter in Latin America, and one of the leading ones in the world.
There is another factor that makes a great deal of difference. Can you get stuff into and out of the place?
The other important geographic factor is whether an area is accessible to ocean-going ships because it lies either on the sea coast or on a navigable river. It costs roughly seven times more to ship a ton of cargo by land than by sea. That puts landlocked countries at an economic disadvantage, and helps explain why landlocked Bolivia and semi-landlocked Paraguay are the poorest countries of South America. It also helps explain why Africa, with no river navigable to the sea for hundreds of miles except the Nile, and with fifteen landlocked nations, is the poorest continent. Eleven of those fifteen landlocked African nations have average incomes of $600 or less; only two countries outside Africa (Afghanistan and Nepal, both also landlocked) are as poor.
I recall here the real estate agent's three criteria for a valuable house: location, location, and location. It is going to be very difficult to raise the standard of living in central Africa or most of South America to the levels of, say, Sweden. This is not to say that it's impossible. If we want to make progress, we have to acknowledge reality. Diamond's review in the NYRB is pregnant with reality.
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Posted by: Steven Richard | Tuesday, May 22, 2012 at 06:22 AM
The New World developed parallel civilizations only to be overgodded and raped by European Catholics with bigger weapons. Fourth World "poverty" is resistance to the failed repressive nature of US-style capitalism as it lays waste to the planet.
Rewilding the West combined with statehood for the tribes and Mexico would dilute the rampant earth hatred touted by your Republican Party, Ken, with the social successes evolving in France and in the South American countries.
Obama in a landslide.
Posted by: larry kurtz | Tuesday, May 22, 2012 at 08:17 AM
These theories have credibility only if one ignores the narratives of history, which make exploitation, subjugation, and greed central points in the development of nations that cannot be dismissed.
Posted by: Erin | Tuesday, May 22, 2012 at 11:56 AM
Erin: these theories have credibility because they are supported by the evidence. The "narratives" of which you speak may make you feel all warm and fuzzy, but they have very little explanatory value.
Posted by: Ken Blanchard | Tuesday, May 22, 2012 at 12:20 PM
The narratives of history are not contrived fictions to make us feel good. They, too, are based upon evidence which is put in its cause-and-effect sequences. They are not theories but the record of what happened.
Posted by: Erin | Tuesday, May 22, 2012 at 02:18 PM
Anyone who claims that there is any one "record of what happened" has never been a a student of history, and should be disregarded.
Also you must have missed the entire paragraph that starts:
"Diamond shows that the exploitation thesis is not entirely wrong."
As I'm sure you haven't read the book, please at least read the article before commenting.
Posted by: Spectre | Tuesday, May 22, 2012 at 06:47 PM
The problem I have is this is a gross simplification of what happened. Maize (corn) was first developed and cultivated by native peoples in southern Mexico and Central America, as were tomatoes, many types of beans, squash, peppers, chocolate and sunflowers. Potatoes were from Peru. Turkey, the fowl, was domesticated by native peoples from Mexico. Many of the plants listed above developed in subtropical or tropical environments.
One issue that I think might be partly responsible for north/south differences in development of agriculture is that the tropics provide a wide diversity of foods that are available year long. Thus, not only was food storage more difficult, but there was far less need for stored foods.
If you look at the life history of most precursors of our crops, you find most had adaptations to exploit newly disturbed areas. Thus, they would be found growing in close proximity to humans, and their disturbances. In the tropics, such disturbances close quickly from invasion by nearby perennials. In the temperate regions the disturbances are longer lived and more likely to be filled first by annuals through wind borne or animal borne seed.
There are a lot of theories for the collapse of the Native American civilizations. Some certainly fell victim ot European diseases and conquest. Some probably faded away due to climate change.
Posted by: Donald Pay | Tuesday, May 22, 2012 at 09:29 PM
Erin, I could not find where you said there was any "one" narrative of history, but what could we majors and minors in history possibly know? I trust you have been put in your place and will never again venture to intrude your ignorance and stupid self into the palace of the only true and faithful cognition.
Posted by: Anne | Tuesday, May 22, 2012 at 10:03 PM
Erin: Sometimes "The narratives of history are" precisely "contrived fictions to make us feel good." Consider manifest destiny. Narratives about colonial exploitation and brutality are quite genuine and tell a story that we cannot afford to ignore. The question is whether they explain the phenomena that Diamond sets out to explain. They don't.
Consider the contrast between India and Afghanistan. Which country was subject to a more thorough and pervasive colonization by a European power? India. Which is poorer and less advanced socially, politically, and technologically? Afghanistan. Diamond's analysis is very robust and explains global patterns very well. The exploitation thesis isn't and doesn't.
Posted by: Ken Blanchard | Tuesday, May 22, 2012 at 11:47 PM
Donald: I wish I had time to properly respond to your very excellent post. I have to make do with the following. All historical explanation are oversimplifications. This is especially true of any that attempts to explain global phenomena. Jared Diamond's argument is almost as robust as the tilted axis theory of the seasons, which is also a "gross oversimplification".
Your middle two paragraphs puzzle me a bit, perhaps because you know more about this than I do. As for your final paragraph: the question is not why Native American empires collapsed, but why Pizarro met Atahualpa in Peru instead of Atahualpa meeting Pizarro in Spain. Diamond answers that question.
Posted by: Ken Blanchard | Tuesday, May 22, 2012 at 11:56 PM
Anne: Erin is entitled to criticize my arguments here, as you are. I invite it. Spectre is entitled and invited to criticize Erin. You may think that Spectre's criticism was unfair, but that is what argument is all about. I have no idea what you mean when you speak of "the palace of the only true and faithful cognition." No one here, neither myself nor my spirited critics, have any such illusions.
I believe I have treated you with respect, but I understand respect to mean taking your statements seriously and plainly stating when I disagree with them.
Posted by: Ken Blanchard | Wednesday, May 23, 2012 at 12:05 AM