The Bottom Billion

by Russ Roberts on January 28, 2008

in Foreign Aid, Podcast

The latest EconTalk is a conversation with Paul Collier about the ideas in his book, The Bottom Billion. I think he is overly optimistic about military intervention and the productivity of voluntary standards in helping people in desperately poor countries. But his discussion of conflict is very interesting. I never realized how common rebellion and violence is in poor countries. Reading about it got me thinking about the incentives that conflict creates and the incentives that produce conflict. I also never thought about the challenges of land-locked countries, a phenomenon that Collier highlights. William Easterly is scheduled to appear on EconTalk in two weeks. He’ll provide a different perspective.

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{ 15 comments }

P Plante January 28, 2008 at 2:55 pm

One of Saddam Hussein's incentives for invading Kuwait (besides the oil) in 1990 was to gain Kuwait's deep water ports. Iraq is largely landlocked, except for Basra.

My recollection is that most of this area was under British colonial control after WW1. I am not sure how the present national boundaries were determined, but I suspect that there was no nation of Iraq before the British came in – probably just a bunch of warlord sheiks. The present day Iraq is probably a product of national gerrymandering by the British and/or UN after WW2 that thrust together hostile social groups; e.g. the Shiite and Sunni muslims and the Kurds. Funny how such things can have "unintended consequences" many years later.

FreedomLover January 28, 2008 at 7:31 pm

I had a teacher ask if we were worried about the upcoming elections. When the answer was "no," he was surprised. "But what if Bush doesn't want to give up power?" He assumed that there would be riots, etc. just like we see in Kenya right now… There really is a big difference between places like this and the US…

Isaac Crawford
Blogging in Yemen
http://www.isaharr.com

Is this teacher one of those braindead leftists who actually believe Bush is a dictator, Nazi, baby killer, etc…

jurisnaturalist January 29, 2008 at 2:37 am

I interviewed Collier last month for our radio show, "Failure to Refrain," on the NC State radio station. He talked slowly so I edited out 10 minutes of silence and got a 25 minute interview. Beyond describing the outline of his book, we got into a little tit-for-tat over Asian tariffs as a tool for improving African trade.
I must say I like Lant Pritchett's approach a good deal more.
The militarism really repels me. It strikes of Nials Fergusson's imperialism (indeed Fergy gave the book a positive review).
Reich's new book is even more sinister in its liberal-conservatism. ie. let's get back to what Berle and Means had in mind! Good God! I've got to interview him of Thrusday
Nathanael Snow

John Dewey January 29, 2008 at 9:37 am

P plante: "One of Saddam Hussein's incentives for invading Kuwait (besides the oil) in 1990 was to gain Kuwait's deep water ports."

I've read that was one justification. Please consider, though, the insight provided Sunday night by FBI interrogator George Piro:

Saddam accused Kuwait of wrecking Iraq’s economy by stealing oil and demanding repayment of loans. But Piro learned, for the first time, that the brutal invasion was triggered by personal insult.

"What really triggered it for him, according to Saddam, was he had sent his foreign minister to Kuwait to meet with the Emir Al Sabah, the former leader of Kuwait, to try to resolve some of these issues. And the Emir told the foreign minister of Iraq that he would not stop doing what he was doing until he turned every Iraqi woman into a $10 prostitute. And that really sealed it for him, to invade Kuwait. He wanted to punish, he told me, Emir Al Sabah, for saying that," Piro explains."

Interrogator Shares Saddam's Confessions

I'm no Mideast scholar, but what I've read indicates such an insult by an important leader demanded a strong response.

FreedomLover January 29, 2008 at 11:50 am

John Dewey:

And it's a big surprise that Americans *roll eyes* at the primitiveness of Arabs?

Kent Gatewood January 29, 2008 at 1:50 pm

The only logical way to rescue these poor people is to bring them all to America. Open borders, open minds, open wallets.

vidyohs January 29, 2008 at 4:07 pm

Kent,

Pardon me for thinking I have a better way.

As our government is so adept at solving problems and so creating a paradise of wealthy equality, I believe it would be only fitting and proper to just send our government over there, the whole kit and kaboodle mind you, and give them fresh meat to help.

Why inconvenience good poor people by making them move here?

Then we could start over with hindsight in mind.

muirgeo January 30, 2008 at 10:01 am

Good interview Professor as always. I'm mostly through it and the glaring omission IMO is the influence of Western capitalism which so often loves a dictator. Shell Oil in Niger and DeViers in the diamond countries are just 2 examples.

The assumption is that these governments problems are all internal. The effect of western money and its power brokers on democracy can't be understated. These bottom billion speak of the glaring reason why capitalist and there money must be separated from the institutions of the government in their countries as well as in our own country.

Western capitalist love a dictator as long as it's not a Hugo type. But I'm sure the hit is already on for him. All through the interview all I could think of was examples of disaster capitalism played out over and over again.

Kent Gatewood January 30, 2008 at 4:04 pm

vidyohs, finally got my pride to agree you are right.

Kent

muirgeo January 30, 2008 at 4:07 pm

You yourself say that companies love a dictator, and somehow its "capitalism's" fault that people get screwed by the dictator.
Isaac Crawford

Yeah , Isaac, there is complicity as an honest business would not deal with a dictator.

When you're making profits as Shell does in Niger it's NOT capitalism anymore.

http://www.vanityfair.com/politics/features/2007/02/junger200702?currentPage=1

And this, "Minus them, the evil capitalists would have to pay going rates for wages, land use, etc" is a statement of ignorance as the capitalist have been caught paying huge sums to the dictators and their armies to supress the will of the people in those countries.

Eric January 30, 2008 at 5:10 pm

Ah. If there were no dictators there would be no one to pay in order to suppress the will of the people, so the corporations would in fact have to pay the going rate.

The corporations are complicit, yes, and their willingness to pay contributes to tyranny. But we had tyranny and oppression before the corporation too, so it can't possibly be the sole cause of this evil.

The feeling that is the norm here is that government should be structured in order to remove the corporations' incentive to bribe, cheat, or rent-seek, because you can't trust everyone to be honest all the time. When the corporations can't gain anything from influencing government, they probably won't do it anymore.

The flip side is that you can't make government powerless, because then there will be nothing to stop the powerful from steamrolling the less powerful. So it's a tricky situation that still requires some serious thought. Don't let anyone tell you that it's been solved and all we need to do now is implement.

Also, muirego — I highly recommend Hilaire Belloc's "The Servile State". (Note: it's not as outlandishly Randian as it sounds. Not even close.) I think his viewpoint and yours are likely similar and that your arguments would gain something from his, which are fascinating.

Best,
Eric

muirgeo January 30, 2008 at 6:05 pm

Eric,

I pretty much agree with everything you said. Dictators and profiteers are a bit like the chicken or the egg. Which came first?(Actually the chicken or egg thing has been settled…the egg came first…but I think you know what I mean.)

My main point was to bring up the outside influences on the on-going plight of the bottom million. In no way would I say that was their only problem, the others being highlighted well in the professors podcast.

I don't know what the exact figures are but I've heard that 1% of the worlds population holds 50% of its wealth. Such is astonisningly wrong and I would agree this wouldn't occur in a properly set up capitalistic system and is mostly a result of corrupted capitalism.

My biggest point is that capitalism works best with proper oversight… I never said that was an easy thing to achieve but certainly something to strive for. Likewise I think its idealistic to assume capitalism left to itself is always the easy answer.

Eric January 30, 2008 at 8:07 pm

I do know what you mean, and I agree that the outside influence problems are just a part of the total development problem.

On the concentration of wealth issue, it does appear that we differ: My opinion (under-educated as it is) is that increasing concentration is not a problem per se, although some of its causes and results are. But an unequal distribution is not necessarily the result of immoral actions. One could accumulate a large share of wealth, for example, by developing an extraordinary invention or making an insightful investment decision before the rest of the crowd.

The result of this line of argument is that if you preclude the concentration of wealth, you may be proscribing not only immoral acts, but also some other activities that are not in themselves harmful or immoral.

Because of that concern, I believe that we can't end wealth concentration without curtailing liberty. But that's not the same as endorsing uninhibited laissez faire; clearly there need to be rules. Even Hayek endorsed the social safety net in Road to Serfdom. But how those rules are structured is important to ensuring that we don't grant arbitrary power to the government.

So I suppose the question is, do you feel that wealth concentration is immoral per se, and that curtailing it is therefore an appropriate goal in its own right? Or do you feel that it is specific immoral actions that deserve our attention? Or have I misread your post (always a possibility)?

I hope that this will lead us towards the answer to exactly what "proper oversight" entails…

muirgeo January 30, 2008 at 8:48 pm

I guess I would ask you if you think the system of lords and serfs during the middle ages was immoral? Todays situation is really little different. The degree of wealth concentration is indeed immorale. To believe that 1% of the worlds population is worth the labor and working of 50% is to believe in salvery.

Wealth concentration is a problem of degree as certainly I don't think we can have equality of wealth or outcomes but at some point these huge accumulations of wealth are not moral because they are no different then slavery or endentured servitude.

"The money powers prey upon the nation in times of peace and conspire against it in times of adversity. The banking powers are more despotic than a monarchy, more insolent than autocracy, more selfish than bureaucracy. They denounce as public enemies all who question their methods or throw light upon their crimes. I have two great enemies, the Southern Army in front of me and the bankers in the rear. Of the two, the one at my rear is my greatest foe."
Abraham Lincoln

Eric January 31, 2008 at 9:47 am

I would respond by challenging the analogy on both ends:

1) The serfs of the Middle Ages didn't really have it so bad, from an ownership perspective (although clearly everything else was @#%!). Belloc describes three types of land: a) the lord's land, which the serfs worked and received a portion of the produce of; b) the village's land, which the lord and villagers essentially shared (usually pasture and/or forest); and c) the small landholdings of the individual serfs, which could be passed down but not sold (and from which the lord received a portion of the produce).

The serfs ended up tied to the land, but their position was relatively secure. As a result of this ownership structure, wealth was actually distributed quite broadly. By today's standards everyone was dirt poor. What makes the position of the serfs so undesirable is a freedom problem rather than an ownership or wealth problem — that they were tied to the land, because if they left they would starve. But they did have a recognized claim on that land/wealth (the two being basically identical at the time).

2) The other 99% (accepting your description of the distribution for the purposes of argument at least; I haven't looked) aren't as beholden to the 1% as the serfs were to the lords. Even without wealth, labor today is: a) mobile, meaning that if there is no suitable work at A, it is possible to look for work in B, C, D, E, and F without leaving the security of one's current job (impossible in the past); b) insured, meaning that very basic food, shelter, and medical care are available to those who don't work, which allows workers a modicum of flexibility in the wage bargain; c) enfranchised, meaning simply having the right to vote, obviously politicians can still be corrupted/liars/swindlers/etc.

There are other factors that separate today's workers from the serfs as well, such as the broad ownership base of public companies (a relatively recent development), home ownership rates that are still remarkably high by the standards of the last 400 years, and public education that (while very far from perfect) still functions as an engine of social mobility for many.

So on many fronts, today's situation is much different than that of the serfs, even if we leave aside the standard-of-living differences. Limiting the discussion to the U.S., on what grounds do you equate the serfs of yesteryear to today's workers? If you chose to leave the analogy behind, on what grounds is being part of the other 99% similar to indentured servitude?

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