Why Poor Nations? It’s Power, Of Course

January 4, 2009

Why Poor Nations? It’s Power, Of Course

By Colleague

In “Laws (and wealth) of nations: A controversial theory blames countries’ lagging economies on Napoleon,” Nicholas Thompson (link here) asks, “Why do some countries prosper while others falter? It’s one of the world’s trillion-dollar questions.” To answer this, he describes the research of four economist on the connection between — in very general terms — “prosperous economy” and “type of legal system.” Their core finding: common law based systems perform better than (French-based) civil law systems. The reason: common law systems give more power to the judicial branch, which does a better job as cross-checking other institutions of government power.

In other words, even though the article doesn’t make the connection, the really important variable is Power. The more it is checked and held accountable, the better the economy. No surprise to democratic peace theorists! Indeed, Power is something that matters across the spectrum of a country: concentrations of Power matter in politics, economics, society, the legal system, education, religion, sports — everything! If Power is minimal, then People prosper and thrive. If Power is concentrated, then People do the bidding of others — not themselves — and they do not prosper. And if Power is concentrated everywhere, we find totalitarianism, which is most simply defined as a political system which tries to control everything, including thought. And in such systems, Power Kills.

Why is something so simple so hard?
From Rummel:

Link of Note

2005 Index of Economic Freedom

Note that his index in de facto a measure of centralized power. Note then that the most economically free countries are generally those with decentralized power (the U.S. tied at 12th with Switzerland), the most political free, and those with the most represent economies are generally the poorest countries. Power not only kills, it impoverishes.

The Solution to Mass Poverty

December 12, 2008

[First published May 24, 2005] Lately in international organization circles, there has been much to do about poverty, with some sad facts being focused upon (from the Guardian Unlimited link here):

One third of deaths – some 18 million people a year – are caused by poverty.

An estimated 600m children live in absolute poverty. Every year more than 10 million children die of hunger and preventable diseases.

Income per person in the poorest countries in Africa has fallen by a quarter in the past 20 years.

More than half a million women die in pregnancy and childbirth every year – one death a minute.

Clear to all is that the effort to ameliorate the conditions of the poor in one country after another has failed. In the resulting soul searching, especially at the World Bank that has been in the forefront of this effort, a reevaluation of their approach to poverty concludes that they have placed too much effort on lessening poverty, rather than fostering economic growth, an increase which, to invent an expression, will lift all boats.

Still, as I go through the articles on this, one thing is missing, which is the real solution. Look again at Table 4.1 and its plot in Figure 4.1 that I showed in a previous blog:

Table  4.1
Figure 4.1

Note the strong relationship between measure of poverty (HPI) and human development (HDI), and the internal freedom, really the liberal democraticness, of a country.

The degree to which a country is free is strongly related to its economic freedom, which in turn is inversely related to the impoverishment of its people. And the theoretical reason for this is well known among free market economists, so there is theory and fact and fact for this solution.

So, why don’t the international organizations get it? To push economic solutions, to focus on poverty, is accepted internationally even by the mass of dictators that benefit from the poverty-development give-aways, and the periodical forgiveness of their debts (we are due for another round of the fleecing of the taxpayers of the democracies). And to focus on poverty and development to lessen mass poverty is compassionate and objective. But, to focus on democratic freedom . . . . well, now, that is . . . being political and internationall partisan, you know. And where is the profit for dictators in that?

Link of Note

”World Bank failing to reduce poverty in poorest countries” (5/20/05) Financial Express

The article says:

The World Bank, the largest financer of projects in developing nations, is failing in its mission to reduce poverty in the poorest countries by paying too little attention to boosting economic growth, an internal audit found.

In the past 15 years, the bank put too much emphasis on social development and cut spending on bridges, dams, pipelines and other projects that have a more dramatic impact on economic growth, according to the report, obtained by Bloomberg News.

The World Bank’s model to fight poverty in the poorest of nations had, in practice, paid insufficient attention to fighting poverty growth, the 115-page report said. “Without growth, no sustainable poverty reduction is likely.”

There is nothing on democracy or freedom in the article. And I’m afraid this refocus on growth will mean more grants to the dictators, and a recycling of the international forgiveness of their debts in order to facilitate growth. Heavy sigh.

Democratic Peace