There's a very interesting article in the Sydney Morning Herald.
Peter Hartcher comments:
In the long story of humankind, it is normal that societies lucky enough to have rich natural resources end up failures. The apparent blessings of nature usually turn out to be a curse. Not just most of the time, but virtually all the time.
Even the few societies . . . that manage to build a successful country in a resource-rich land are still under threat from nature's bounty. When the treasure under the soil surges in value, like some seismic upheaval, it can destabilise a country and throw it into economic turmoil.
. . .
It's a well-established phenomenon and it goes by several names, none of which have a happy ring - the resource paradox, the resource curse, King Midas's dilemma, the Dutch disease. And there is another name for one variant of it - the Gregory thesis, named after Bob Gregory.
The 16th-century French philosopher Jean Bodin explained the curse this way: "Men of a fat and fertile soil are most commonly effeminate and cowards; whereas contrariwise a barren country makes men temperate by necessity, and by consequence careful, vigilant and industrious."
More recently, the economics Nobel laureate Joseph Stiglitz asserted it as a general principle that "the extraction of resources lowers the wealth of a country". The record is so bad that Stiglitz advised: "If a country is unable to use the funds well, it may be preferable to leave the resources in the ground."
One expert, Richard Auty, of Lancaster University in Britain, found that, if you wanted a fast-growing economy, you were indeed better off to be a resource-poor country - their economies grew three times faster than those of resource-rich nations on average between 1960 and 1990.
There's a lot more at the link. Worth reading, and reflecting on it. Here in the USA, we're one of the few successful economies to grow out of a resource-rich country. Given our current political, social and economic malaise, are we seeing the symptoms of this problem arising here?
Food for thought.
Peter
Very Good Point
ReplyDeleteApparently we have recognized the problem, at least with respect to energy, and are solving it by putting our reserves under interdict.
ReplyDeleteIt's an interesting conjecture, though, and I am reminded of a business trip to Puerto Rico where my contact there explained that PR was poor because it had no natural resources. I pointed out to him that Hong Kong not only had no resources, but had to import its drinking water from the Red Chinese, yet was the richest 25 square miles on earth.
It's not what you have, it's what you make of it.
The US is a resource-rich country, but unlike most examples cited, the resources do not belong to the government or to a small clique. Rather they belong to a large group of folks who individually have rather modest holdings, and behave as though the resource is quite finite, which for them, it is.