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The Rent is Too Damned High
The Trouble with BRICS
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  • Ellen

    Good point. This is why predictions by the Economist Magazine about which countries are about to take off and become economic powers are almost always wrong. They have been laughably wrong about Brazil for at least 30 years (and possibly longer, before I started to read their magazine). About Brazil, it is often humorously said, “Brazil is the country of the future and will always be so.”

    The entrenched problems of countries like Brazil and many others, as you so wisely state, reflect the peculiar history and culture of these places in a particularly unique way. In other words, no country in the world has the obstacles to economic and social success that Brazil has because no other country is a Portuguese-speaking, Latin-Catholic, former colony, with a half-mulatto population base, and a large Lebanese-Christian business class, etc, etc etc. It is these very unique details that create the unique roadblocks of each and every society in the world.

    We have a class of social scientists and economists who are trained to think as universalists. That is, they deeply believe all countries have the same type of problems, which can be solved by the same type of solutions, eg, cutting taxes, lowering subsidies, flexible labor market, individual – not group – rights, etc. Unfortunately for these people, who inhabit our universities and international organizations like the World Bank and IMF, there is no universal roadmap to success. What made America successful in the past will not work for other countries today, and may not work for America in the future. As Mao used to say, 1000 flowers should bloom, or whatever that silly phrase was. Each society can find success in its own unique way, based in its own unique population and culture. There may be lessons in the experience of individual countries for others to learn, but there is no universal model.

    • Dale Fayda

      I’ll say it until my dying day – culture (and to a much lesser extent geography) determines all. Everything else is just conversation.

    • Jim__L

      I was tempted to paraphrase Anna Karenina here, but the more I think about it, the less it seems to apply.

      This world is chaotic and full of exceptions. Cheaters can prosper for a time. Careful, diligent people can be faced with aspects of reality that impoverish them. Individuals and the institutions they build can vary wildly in their characteristics.

      That said — I think it is sensible to conclude that sustained prosperity is tough to build on rent-seeking behavior. Rent-seeking behavior denies the economy the potential productivity of the rentier, reducing overall prosperity. When rent-seeking behavior is contagious (as in cases of Brazil’s endemic corruption), the problem obviously gets worse. This may be offset for a time by specific advantages (Saudi oil comes to mind), but long-term, getting everyone to work diligently to fill the needs, wants, and wishes of themselves and others is probably the best way to go.

      • Ellen

        Go ahead and quote Anna Karenina. That also occurred to me as I was writing. Except the first part of the thought is wrong. The corrected version of the Tolstoy sentence would be: “Happy countries are NOT alike, but unhappy countries are even less so. They are each unhappy in their own very unique ways.”

        • Jim__L

          You might be interested in WRM’s book, “God and Gold”. To my mind, that book does a great job of answering the old power-politics question, “Why Europe?” and specifically, “Why the UK and the US?”

          (Also read Jared Diamond’s “Guns, Germs, and Steel”, for a good answer to the question, “Why Eurasia?” Sadly, his arguments for “Why Europe” are somewhat nonsensical.)

          Of course, with the relative decline of the US and the absolute decline of the UK, fifty or a hundred years from now we’ll probably need a third volume to explain that.

          • Ellen

            I read a review of Diamond’s book and decided not to read the actual book when I discovered that he attributed the lack of development of Africa to geographical limitations like few navigable rivers etc. Whereas Europe has many navigable rivers and so on. That is clearly a politically correct and very manicured treatment of a subject designed not to give offense to the usual easily offended types.

            Of 1000 tribes in Africa, only 3 have ever invented their own alphabets and written language. The Ethiopians are the largest and most important of the three. They also developed their very own brand of Christianity, to which they have remained very faithful in spite of being surrounded by Muslims. Not surprisingly, with a relatively decent political leadership that they have today, they are finally moving onto a path of sustainable development that may turn them into a major African and Near Eastern power within 10 years. Most of the rest of Africa is a a backwater and likely to remain one.

            There is no reason why a group of people who have their own alphabet, language and religious life should not be successful as a nation. On the other hand, a group of people who have contributed nothing unique to the world in thousands of years is not likely to start doing so anytime soon. The problems of the Arabs are interesting to think about, and no one has a totally convincing explanation for their decline to the abysmal level they are now at, which seems to go lower by the month.

            I agree with your take on the UK and US.

          • Greg Olsen

            A lot of Subsaharan Africa’s development problems can be attributed to geography. You should read Jeffrey Herbst’s States and Power in Africa. A lot of Africa’s problems are the inability for governments to actually control the territories they are nominally ruling over. The placement of major urban areas and lack of road networks are a big reason why Africa has failed to develop. The “settler” colonies, that actually had been developed by the colonial powers have generally had better outcomes than those where development was only in coastal cities.

            The other major problem in Africa, is that the Westphalian state doesn’t really fit the conditions on the continent. Africa never had states. There were occasionally empires, but as a very sparsely populated continent, it has generally been ungovernable.

            Geography does certainly play a role. Large portions of the continent are very inhospitable for settlement. It is as if you can’t win. You build a hydro project to generate power and you get more waterborne disease, for example. The colonial powers learned this with the band of the continent that is infested with trypanosomiasis. You can’t raise horses in that area making the path that Europe and the Americas made in development impossible in the same way.

            the challenges of geography don’t invalidate the cultural problems. The African states generally lack patriotic sentiment. Africans have a greater allegiance to “Africa” than to their individual states. The only African state that was irredentist and wanted borders redrawn after decolonization was Somalia, and that itself was an accident of history, being based on the pan-Somalism of the Mad Mullah. Others were generally ruled by elites drawn from the colonial administration ranks. Status quo was the order of the day viz. borders.

  • lord acton

    Good thing we don’t have that problem (bedeviled by entrenched interests here).

    • Jacksonian_Libertarian

      I caught that sarcasm.
      Examples include, the Labor Gang Monopolies that use their monopoly on providing labor to extort money from the Taxpayer and Businesses, an act that puts the criminals behind bars. An ever expanding Federal Government Monopoly that so burdens the productive private sector that the economy has grown an average of 1.7% over the last 15 years. Compare that to America’s first 100 years when growth was between 7%-10%, while the power hungry Federal Government Monopoly was still contained and limited by the terms of the Constitution.
      America is lucky in that it still has a written Constitution that an Honorable President could enforce, and return all the authorities and the Federal Government has unjustly, and in violation of the Constitution, stolen from the States and the People. America still has the opportunity to go back to the huge growth rates it experienced in its first 100 years. This would be Awesome as the “Greatest Force in the Universe” is compounding growth, and Americans could get it working for them again.

      • Greg Olsen

        It doesn’t take just a president of the right ideological persuasion. We are still dealing with the legacy of legal precedent. The Commerce Clause has been stretched to cover almost anything–a legacy of the New Deal. I am thinking that a constitutional amendment is in order to institute judicial retention elections like many states have.

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