Why are poor countries poor?
In his book ` The Undercover Economist, published by Little, Brown in 2006 (reprinted four times in 2006) Hbk ISBN 0 316 732931; C format ISBN 0 316 731 161, Tim Harford explains why the ordinary people in poor countries are trapped in poverty.
He begins by pointing out the fact that economists used to think that economic wealth came from a combination of man-made resources (roads, factories, machines, telephone systems), human resources (hard work and education) and technological resources (technical know how i.e high tech machinery).
He states that it is obvious that poor countries grow into rich countries by investing money in physical resources and by improving human and technological resources with education and technology transfer programmes.
Why are poor countries not catching up with rich countries in spite of huge foreign aid and foreign investment?
Harford points out that poor countries should show rapid signs of catching up to rich countries as slight improvements in resources show increasing benefits.
Harford points out the fact that countries like China, Taiwan and South Korea, Botswana, Chile, Mauritius and Singapore have become the fastest growing economies on the planet yet fifty years ago these countries lacked man-made, human, technical and sometimes natural resources and yet have grown much richer since then improving their education, technology and infrastructure.
Harford states that a lack of improvement results from the theft of the resources of a nation by its leaders.
Harford refers to an economist called Manour Olson who suggests that the poverty of the poor countries arises from stable dictatorships, which stunt their economic growth.
“A purely self-interested dictator will realize that he cannot destroy the economy and starve the people if he plans to remain in power because he would exhaust all the resources and have nothing to steal the following year.
As long as a dictator feels secure in his power, he will not kill the goose that lays the golden eggs.
He will not destroy a community which continues to produce opportunities for exploitation.
“Like the disease whose very existence relies on the body it afflicts, the dictator has to keep the economy functioning in order to steal from it.
This example from the top creates `bandits, bandits everywhere.’
Self-interested, ambitious people in power are often the cause of hardship for the poor as checks and balances to prevent corruption are either removed or completely ignored.
Educating the population is the last thing anyone profits from doing. Keeping the population ignorant and vulnerable to exploitation is a necessary component in maintaining political power.
Traditional authorities and uneducated citizens are ignorant of models of healthy governance and unable to comprehend the criminal genius developed in Western societies to exploit native peoples and deprive them of their traditional lands and resources.
If a poor country has a thief for a leader, theft and dishonesty will be widespread because he needs to allow others to steal in order to keep their support.
At the top of this dishonest hierarchy, the money stolen from the nation may be measured in hundreds of millions or even hundreds of billions.
Further down the pyramid of wealth, development is prevented because the rules or laws of the society do not encourage projects or businesses which would be to the common good.
The web of corruption undermines every effort to improve the infrastructure, attract investment and improve educational standards.
The lack of trust in a community creates a dog eat dog society in which it is in most peoples interest to take action that directly or indirectly damages everyone else.
The rot starts with the government but afflicts the entire society.
There is no point investing in a business because the government will not protect you against thieves. So why not become a thief?
There is no point in getting an education because jobs are not handed out on merit but because of corrupt connections and the government does not provide good schools.
Good governance and economic growth are all about a better life for individuals, more choice, less fear, less toil and hardship.
Letting a selfish few wallow in a nations wealth results in an ignorant and unhealthy population which is constantly being abused.
Do the selfish few need to be reminded that true power lies with the people? Is Samoa a kleptocracy?