International Disparities in Wealth | Basic Economics by Thomas Sowell | Ch. 23
A lot of social justice and left-leaning talking points today are based around the idea of very real and very ubiquitous disparities which exist between the rich and poor. Such disparities exist even between international sovereignties. In this post, we look at how Thomas Sowell addresses these international disparities head on in the 23rd chapter of his book, Basic Economics.
If you haven’t read my previous chapter summaries and thoughts on his book, please click here.
The first thing to recognize is that wealth disparities between nations have always existed, and those disparities are often quite vast, with some nations having less than a fifth or even a tenth of the GDP of other nations. A lot of energy often goes into finding out why such disparities exist. With that, there have been a number of different factors that were found to cause these disparities. Here are some insights into them:
There are a number of geographic factors that have been considered to potentiate a country’s economic well-being. The first thing to note, of course, is that no single country exists that has the exact same geography as another. This powerful fact may cause some to believe international disparities exist due entirely to it, but there’s much more nuance than that.
In regards to growing food, things like the soil composition, rate of rainfall, amount of sunlight, and other fundamental things vary vastly around the world. Additionally, different combinations of the above as well as other factors like the abundance of natural resources, can have positive or negative effects in local areas. Then, the ability for the people of a certain locale to be able to exploit these resources also varies.
Access to water is also important. Most cities around the world are located around rivers, open seas, and other waterways. Such locations allow for better transportation (since water transport is generally historically cheaper than land transport), in addition to the reception and importation of food and fuel. Of course, rivers and waterways are certainly not evenly distributed around the world, and different places around the world have differences in how much these waterways penetrate the main continents.
Here are some examples. Factors like changes in elevation as the water goes to the sea will hinder or help things like transportation. Additionally, in comparing Europe to Africa, though Africa has a much larger landmass, its coastline is shorter than Europe, simply because the coastlines of Europe twist and turn more, and thus creating more opportunity for harbors and such. Even in comparing Western Europe to Eastern Europe, there are differences in temperatures and climates, thus giving Western Europe more flow and time in favorable seasons.
Mountains also have effects on economics and livelihood. Those in lowlands usually form communities that are interdependent on each other, while those in highlands or mountainous regions are more likely isolated. This gives lowlands easier transportation, and thus more cultural sharing, which resulted in faster technological advancement. But mountains have a positive effect in that they supply lowlands with water. While the non-mountainous plains of Africa have resulted in dependency on seasonal rainfall, areas with greater mountain features often benefit from being able to exploit waterways which are fed by mountain runoff.
The availability of certain animals has also affected economies. Prior to the discovery of the Western Hemisphere by Western Europeans, there was a lack of horses, oxen, and other beasts of burden. The lack of such resulted in a dearth of technological development for the indigenous people of North and South America, despite their geographic similarity to Western Europe.
In fact, such a difference in development of civilization meant that those in North America often had no contact with their counterparts in South America, in contrast to the massive trade networks and frequent contact between those in Europe, Africa, and Asia. Similarly, those indigenous to Australia had little contact with those outside, and indeed didn’t have the ability to farm as the soil of Australia has low fertility. While Australia has other natural resource in great abundance, such resources weren’t utilized until after the British had colonized it.
All of these geographic features play into how agriculture grew and expanded as humanity matured, and the places where agriculture was adopted faster produced cities that resulted in greater philosophy, literature, mathematics, and other intellectual (as well as technological) developments. But because geography is so diverse, it’s difficult to locate a singular feature to blame for international disparities.
Differences in culture have also created differences in wealth between various people groups and nations, and may also factor in international disparities in wealth. For example, cultures which promote “rule of law” as opposed to rule by the whims of leaders often also do well economically. Additionally, cultures where honesty is valued and practiced also result in the same, as countries with the greatest corruption are usually also among the poorest. At times, positive attitudes towards work and seeking economic progress have also been positive factors in economic development. Generally, when culture intermingle, the ability to see how others do things differently has stimulated economic growth, whereas isolation usually leads to less progress.
As mentioned in previous chapters, human capital is also a crucial part of prosperity. Even after wartime, when a land has been devastated, often the recovery from such a state can be quite quick when people are given the chance. Such was what happened in Western Europe following the Second World War. In a fascinating way, those who take from others are often doing so to their own detriment, as physical capital that is stolen is not likely to produce lasting wealth, and human capital cannot be replaced in the invention of useful physical capital.
While geography can certainly have impact, the greater impact is whether a nation is able to fully utilize its human capital. In fact, while most advanced civilizations have sprung up in the temperate zone, oftentimes the people who emigrate to other regions from those zones also prosper. Furthermore, the advantages of certain advantageous geographic locations have been known to produce less developed human capital, and thus less economic progress. Thus, those in tropical zones have never had the hardship of needing to save food for the winter, whereas those in temperate zones did so out of a necessity to survive. In this way, the human capital of habits can create economic benefits.
As mentioned before, whether cultures are willing to learn from each other also as an economic effect. For example, the British and the Japanese, both of which were geographically disadvantaged, eventually overcame their detriments by learning from and incorporating features from other cultures and nations. The Arabian Middle East, on the other hand, went from being a dominant force to resisting learning from others, and fell behind. As Sowell puts it:
Spain translates as many books into Spanish annually as the Arabs have translated into Arabic in a thousand years.
A similar story exists in China, which was extraordinarily advanced before the fifteenth century. But because the country closed itself off, a couple hundred years later, when European nations came knocking, they found themselves at the mercy of those who could impose their might militarily on them.
Similarly, when a society limits its population from determining for themselves what they want to do, the result is often that the people tend to be less productive economically. Whether by race, sex, religion, caste, tribe, or a myriad of other things, systemic targeting or persecution of particular groups tends to prevent a society from actually doing well. In fact, ethnic tensions often come through the implantation of a foreign culture or ethnic group onto native soil, due to the fact that those foreign cultures or groups have some kind of advantage (e.g. they speak a language that is the dominant language for industrial growth). Then, because the foreign group has more control and represented the majority of a certain industry, are hated and persecuted by the indigenous population. In such situations, which is often the norm, leaders of particular ethnic groups have targeted other cultures, often to their own detriment.
How populations change or move, and even how large or dispersed they are, can have an impact on economies, and thus, show up as international disparities.
While overpopulation has been a popular concern, studies show that such doom and gloom theories based on it are absolutely false. There are many countries with high population density that have much higher living standards than others. In fact, poverty and famine in the world are more closely associated with sparse or thin populations, rather than dense ones. While there are certainly poor countries that are densely populated (i.e. Bangladesh), it’s not about the number of people as much as the productivity, habits, skills, experience, and other factors that make a country rich or poor.
As humanity has evolved over the centuries, there have also been times of mass movement of populations. Such movements in pre-industrial and early industrial ages would diffuse the knowledge of technological advancements from one area into other regions and nations. As transportation and communications improved, such advances spread faster and faster. Mass movement also gives people chances to adopt other cultures, some of which are more conducive to economic progress. Thus, peoples who are initially poor may migrate to other places in which they can prosper. But this is not always the case.
In history, there have been many instances of invasions and conquests, most of which resulted in transfers of wealth and culture, and has had real effects on international disparities in wealth. While today most of it is blamed on Europeans, this happened across history with Asian, Middle Eastern, and African conquerors as well.
Fascinatingly, the imperialism of nations more often than not resulted in the impoverishing of the conquerors. For example, the Spanish Empire extended from California to the southernmost parts of South America, but today, Spain is one of the poorest countries in Western Europe. Countries like Switzerland and Norway, which never had empires, have much higher standards of living.
Oftentimes, conquerors don’t actually promote commerce, industry, and labor, but rather do so to support the luxurious lives of their elites. The Spanish aren’t alone in this. No one really thinks about Genghis Khan’s Mongolian hordes or the threat of the Ottoman Empire anymore, nor the Moguls or Russian Empires. The British Empire may be the exception, since most Britons today are relatively well off. However, at the height of its imperial rule, only individual elites were rich, while the rest of the British citizenry were heavily burdened with taxes. Even with the largest slave trade in the world, such a thing only amounted to less than 2 percent of its industry.
In fact, slavery as an industry was a massive waste, economically. In every nation where there were large concentrations of use of slaves, from the southern part of the United States to parts of Eastern Europe (where slavery lasted far longer than in the West), those places remained more impoverished than those without. Forced enslavement has always resulted in less economic development over the long term, proved over centuries to even today, where places like Sub-Saharan Africa where slavery is still allowed are noted for extreme poverty. Thus, imperialism cannot be said to have much economic benefit, especially in the long term.
With all the factors given above, it’s extraordinarily difficult to compare any number of nations or civilizations. What we can say is that interaction between cultures and people is extremely important. As interaction between different peoples increased, the ability to exploit natural resources increased as well. After all, oil may be a valuable resource today, but the caveman of millennia ago would have no use for it. And while immigration can have sometimes resulted in increased economic activity, not all immigrants equally emphasized the same thing within their cultures.
Even in assessing imperialism, we must remember that far more indigenous people in the Western Hemisphere died due to diseases introduced than anything else. As Sowell explains:
It was said of a kindly Spanish priest who went among the native peoples in friendship, as a missionary, that he was probably responsible for more deaths among them than even the most brutal Conquistador.
From all of the issues above, the only thing we really understand is that trying to determine patterns of outcomes in equality or inequality is nearly impossible. Hopefully, future leaders and people will recognize this fact, too.
In relation to what’s talked about in the mainstream media and on most of the big tech platforms today, this chapter on international disparities in wealth is an interesting take. Of course, due to the ubiquity of terms like “equity” or “social justice”, it’s pretty difficult not to think about such things these days, even if it’s just to rant on how everything presented today just feels extraordinarily and unnecessarily political.
The grand implication of differences in geographic origin, cultural and population differences, as well as political and class circumstances on international disparities is framed and understood as this: there is no singular pattern or conclusion anyone can make about whichever category they choose, be it race, ethnicity, religion, sex, or otherwise, that can conclusively and universally apply to that entire category.
That one nation or country is poorer economically is not necessarily due to oppression from another nation, nor even another race. Such things can certainly happen, but as Sowell points out, over the long term, it’s rarely the case, since it’s actually economically unfeasible to maintain oppressive tactics for very long before the oppressors are actually paying more to be oppressive than otherwise.
This does lead me to wonder about something, however. Presently, one of the most oppressive regimes in the world is the CCP (the communist party of China), who have targeted Tibetans, spiritual practitioners of Falun Gong, and most recently Uygher Muslims in some of the most atrocious human rights abuses ever. If you don’t know what’s going on, I would encourage you to listen to any of China Uncensored’s Youtube videos to get caught up on the subject. But, in short, it wouldn’t be any stretch or exaggeration to say what’s happening is as bad or worse than what has happened under the most evil and despotic regimes in history.
The thing is, that they’ve been doing this for a while. The Great Leap Forward and the Cultural Revolution, which sparked the communist domination of China directly after the second World War, targeted and killed over 20 million people. Since then, the regime has continually focused on specific ethnic or religious minorities in genocide and ethnic cleansing.
What is perhaps more disturbing is that China today is one of the wealthiest nations in the world. Its GDP is rising, and is set to overtake the United States sooner than we think. This leads us to the question: if the oppression of population leads to economic stagnation, then why has China boomed economically, even while atrocities happen? Is this an outlier against Sowell’s argument in talking about international disparities in wealth?
It’s significant, I think, to understand that the United States is one of the nations primarily responsible for boosting China to its current status on the world stage. An overview and understanding of the Kissinger Doctrine can help clarify this. In a nutshell, however, along with then-President Richard Nixon, Henry Kissinger opened US relations with China with the intent to capitalize on its growing population economically. The result is a China that has grown to economic peaks, despite its oppressive tactics against its own people.
In the interim, the influence of the CCP has infiltrated the United States, from the very top levels of government to its education system. It’s fascinating that the most recent internal conflicts within the United States have almost all centered around tearing the nation apart, both politically and socially. It’s not difficult to make the argument that we are now more divided than ever before, except perhaps during the Civil War era.
My intention isn’t to belabor the point, but rather to point to how Sowell’s argument isn’t flawed at all, but rather doesn’t account much for what’s going on today. The Great Leap Forward and Cultural Revolution in China most assuredly did reduce China economically through its oppressive tactics. But Sowell never accounts for two superpowers colluding to prop up an oppressive regime, which is what has happened since the 70’s. The world would certainly look different if the US and the Soviet Union were as economically entangled as China and the US are today.
It may be that such a situation is unprecedented in history, and we have yet to see how it all plays out. But that would fall outside the scope of a chapter on international disparities in wealth.