Why Nations Prosper or Fail

Interesting article in the NY Times about new economic research showing that the reason some nations thrive and others fail. Hint - it has less to do with climate or cultural ideals and a lot to do with whether the common person feels like they have a stake in the economy.

http://www.nytimes.com/2012/03/18/ma...

On a long enough timeline, all nations fail.

LobsterMobster wrote:

On a long enough timeline, all nations fail. :D

As do all species ... except SHARKS! (and cockroaches)

@jdzappa, I don't mean this in a smartass way in the least, but have you read Guns, Germs, and Steel? Just curious as to your thoughts. I found Jared Diamond's reasoning for the long-term success of nations pretty convincing, and he boils it down to geography. Essentially, luck, but he may be talking on a much longer time scale than you were thinking.

http://www.ted.com/talks/jared_diamo...

Good talk.

Edit: fail at embedding.

Pretty hard to take seriously and article that suggests that the prosperity of Thailand is a mystery when considering it's geography

DanB wrote:

Pretty hard to take seriously and article that suggests that the prosperity of Thailand is a mystery when considering it's geography

I think a lot of it also has to do with its geopolitical importance as well. Consider the role it played in the Vietnam War.

When studying the history of South Korea, I couldn't help but notice that the capital for modernization in the 1960's and 70's came mostly from two things. One was foreign aid from the United States that was given in exchange for Korean troops being sent to Vietnam (the White Horse and Tiger divisions were practically bled white by war's end and were involved in some of the bloodiest fighting in Cu Chi and the illegal invasion of Cambodia.). The other was the exportation of skilled human capital to West Germany (mostly nurses and coal miners). Without the governmental transfer payments, the infrastructure for modernization never would have happened.

Paleocon wrote:
DanB wrote:

Pretty hard to take seriously and article that suggests that the prosperity of Thailand is a mystery when considering it's geography

I think a lot of it also has to do with its geopolitical importance as well. Consider the role it played in the Vietnam War.

And that it was one of the few populous places on earth that was never part of a colonial empire.

Great show about this on NPR last night.

And that it was one of the few populous places on earth that was never part of a colonial empire.

Siam had trade agreements with England since 1822, but as the French carved Cambodia out of part of it, they threatened to take over Siam entirely in 1893. The British and French settled the matter by agreeing that neither of them would take it, and they'd protect it from the Dutch and others with a guarantee of it's freedom. They may be proud that they were never actually a colony of the European powers, but they were certainly subject to their power.

jdzappa:

If it's any contribution, I believe that the reason the Philippines continues to fail is for much the same reasons. People of ambition emigrate rather than stay because it's implicit that anything of worth you make will be taken from you by the rich and the powerful, unless you somehow ally yourself with them through marriage or family adoption of some sort.

I have read Jared Diamond and I think his points are vaild from a historical perspective. I think he makes the mistake of predicting the future by looking too closely at the past versus current trends. That's why I like what I'm reading about the new Why Nations Fail book. It looks like it focuses on what it takes for a nation to win in the modern global economy. For example, nations like Haiti suffer so much not only because of natural disasters, but also because a rich elite control everything. Haitians see little reason in improving their lot because as soon as they do the corrupt government is going to swoop in and take it all. Meanwhile, a country like Germany has strong protections for workers and consumers, while also balancing the needs of German companies. That and the money Germany sinks into education and infrastructure is helping them win.

Unfortunately, America is going towards the Haitian model instead of the German one. Our increasingly corrupt system doesn't protect the average citizen at all - and even big businesses are somewhat at the mercy of competing special interests. And keep in mind that this argument is not that popular in America. Nobody wants to be "average," so the elite get away with a lot as Joe Sixpack imagines that one day he'll also be rich when he hits the lotto or the kid wins American Idol. So why "punish the successful" if one day you'll be rich too?

At any rate, the Why Nations Fall blog is very interesting. A lot of it focuses on developing countries, but there are some interesting articles on the rise of the one percent in the US.
http://whynationsfail.com/

LarryC wrote:

jdzappa:

If it's any contribution, I believe that the reason the Philippines continues to fail is for much the same reasons. People of ambition emigrate rather than stay because it's implicit that anything of worth you make will be taken from you by the rich and the powerful, unless you somehow ally yourself with them through marriage or family adoption of some sort.

Larry, your explanation makes perfect sense considering how hard I've seen many of the Filipino families in our parish work and how their efforts have paid off in the US. My concern is that we're moving away from that model here in America. It's much harder to get ahead through work alone. Much of this is the fault of our elites, but the public is also to blame. Instead of a well organized progressive movement like we saw in the late 1800s or 1960s, you have a lot of unfocused anger and entitlement mixed with plenty of apathy and fatalism.

Not sure if this is comforting or alarming, but emigration to the US has significantly slowed. More Filipinos now emigrate to Europe, the Middle East, or other parts of Asia in preference to the US. There are many factors for this trend, but part of the dialogue between OFWs and emigrants is that it's much less profitable now to take the risk - there are better opportunities elsewhere. My own brother emigrated to Australia.

jdzappa wrote:

Unfortunately, America is going towards the Haitian model instead of the German one. Our increasingly corrupt system doesn't protect the average citizen at all - and even big businesses are somewhat at the mercy of competing special interests. And keep in mind that this argument is not that popular in America. Nobody wants to be "average," so the elite get away with a lot as Joe Sixpack imagines that one day he'll also be rich when he hits the lotto or the kid wins American Idol. So why "punish the successful" if one day you'll be rich too?

On my optimistic days, I think of this as the pendulum swinging back the other way. Still, I think the equilibrium point (physics nadir, not game theory term) is shifting the right way overall.