
Reason: Why poor countries are poor.  - jyothi
http://www.reason.com/news/show/33258.html
======
zupatol
I spent 3 weeks in Cameroon this year.

It's not as bad as this article says, but almost. Some roads in Douala have
been fixed, some new roads have been paved. I didn't see a working telephone
line, but several competing mobile phone companies are doing a good job of
connecting almost everybody.

The corruption is still there. My stepmother lives in a new house without
running water. My wife has paid all the fees to have water months ago, but no
one from the water company ever came to do the work. Obviously,a bribe has to
be paid to someone, but we don't know whom. A distant cousin claims he knows
someone at the water company, but the close family doesn't know the cousin
well enough to trust him. The hope that the privatisation of the water company
would lead to a rooting out of corruption by its new american owners has faded
long ago.

However the railroad seems to have taken steps to root out corruption by
making every employee wear a uniform with his name on it, and putting posters
in the train station to ask people do denounce bribery. This was a good
surprise. Before that I couldn't even imagine anything that could be done to
fight corruption. I don't know how well this works, but we had no trouble when
taking the train.

The north of the country, which is mainly muslim, seems to be less corrupt. A
christian told me he wished the president was a muslim because it would reduce
corruption.

Several unconnected people also told me about something else than corruption
that slows down private initiative. They speak of jealousy. Apparently when
someone succeeds, many of those around him get so jealous they try to make him
fail. I don't know what to make of this. I also heard a lot about sorcery.

~~~
bokonist
I don't buy the corruption thesis for explaining lack of development. New York
in the late 1900's was unbelievably corrupt, yet it had one of the fastest
growing economies in the history of the world. Read this book if you want to
read how corrupt it was:
[http://books.google.com/books/pdf/Satan_s_Invisible_World_Di...](http://books.google.com/books/pdf/Satan_s_Invisible_World_Displayed.pdf?id=hQdJAAAAIAAJ&output=pdf&sig=ACfU3U1GUJ9IZP3WMC7qDFpenq9Djp7cbQ)

The same applies for modern China. It is very corrupt. Greasing palms and
making connections is mandatory. Property rights are still quite shaky. Yet it
is growing at a stunning rate.

Bribery is not a huge obstacle to a determined entrepreneur. You just pay it
like any other tax.

~~~
huherto
"New York in the late 1900's was unbelievably corrupt, yet ..."

New York in the 1900's may have been as corrupt as Cameroon today, also the
development of New York at that time may be comparable as the development of
Cameroon now days.

~~~
bokonist
_also the development of New York at that time may be comparable as the
development of Cameroon now days._

No way. I would much, much prefer to live in New York city circa 1900 than
Cameroon today. Read the section of "The Land of the dollar" on New York.
[http://books.google.com/books?hl=en&id=vsxEAAAAIAAJ&...](http://books.google.com/books?hl=en&id=vsxEAAAAIAAJ&dq=the+land+of+the+dollar&printsec=frontcover&source=web&ots=Y7FMCy2MAC&sig=sjPutQwnGgm0NThBm1q8TW4CEg8&sa=X&oi=book_result&resnum=1&ct=result)

And it's not the level of development that's the issue, it's the rate of
growth. 1900's New York was getting much richer every year. The African
countries are almost all either stagnant or actually getting poorer.

------
yummyfajitas
Very true. But it's not just about government banditry, it's also about
cultural acceptance of corruption.

In a conversation with my Iranian ex girlfriend and her mom, it was revealed
that her cousin is relatively wealthy due to being a dirty cop. They just
talked about it like it was no big deal, completely expected. Several Africans
I've known have similarly remarked "I got my drivers license without a bribe!"

In my American family, there are no dirty cops by definition; doing crap like
that will get you disowned.

Changing the government won't change the cultural attitudes, unfortunately.

~~~
markessien
You are making a very bad assumption here. You are assuming that non-
acceptance of dirty cops is something inherent to American culture. Actually,
if America were plunged into a huge depression, and most Americans were
suddenly thrust into poverty, banks folded and so on, this 'culture' would
change in less than a year.

Are you going to disown the guy who is doing dirty work but keeping you alive?

Corruption is not a culture, the potential for corruption is everywhere, it's
in all humans. When it appears to be socially wrong, or when there is strict
enforcement, then people will not be corrupt, but as soon as this changes, it
comes back.

It seems almost as if corruption is the default behavior, and it has to be
actively forced away, and not the other way around.

~~~
jerf
> Actually, if America were plunged into a huge depression, and most Americans
> were suddenly thrust into poverty, banks folded and so on, this 'culture'
> would change in less than a year.

America has been in a depression before. It has also had recessions, and it
wasn't even _rich_ until the twentieth century.

And yet, we still hate corruption.

At the risk of posting something not very Hacker-News friendly, I think the
natural thing to credit is widespread Christianity in America. Whether or not
you like the whole package, the impact of a huge proportion of the population
believing that even if you can entirely get away with it in Earthly terms that
there are still consequences for corruption probably can't be understated.

In fact, I suspect that your are more right now about how the culture would
change under duress than you would have been fifty years ago, and you will
continue to be more right over time. Even if you don't like Christianity, it's
hard to deny that there are worse dominant religions or worldviews to live
under... it takes some pretty damned enlightened rationalism to resist the
temptation to corruption.

~~~
kingkongrevenge
Russians are Christian and there's a lot of corruption there. Same in South
America.

~~~
jimbokun
Not sure Russia is the best example. Until very recently they were the classic
Godless Communists.

South America and Sub Saharan Africa (mentioned by another poster), seem to
serve as viable counter-examples, though.

~~~
schtog
And the nordic countries, while christian, are very secularized and have the
lowest corruption in the world.

~~~
jerf
You get a halo effect where people just sort of pick up the dominant culture.
Nobody nowhere has ever had a 100% culture, but you don't need it. Residual
Christianity seems to work OK. (At least for a while.)

The critical point may be above what sub-Saharan Africa has, or it may be
poorly distributed. The people in power have to reject corruption too; 90% of
the country may be anti-corruption (for whatever reason), but if the entire
ruling class is in the other 10%, you'll still have corruption.

------
pragmatic
If you want an in depth exploration of this I recommend "The Mystery of
Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else" by
Hernando de Soto (the economist, not the explorer)

The basics: Corruption and lack of property rights lead to poverty.

~~~
paddy_m
I did a report on that in an economics class. I explained how there are extra
legal businesses that exist in all of these countries, they are extra legal
because becoming legal is impossible if not overly expensive.

Then I asked the class, who here supports child labor laws? Most people raised
there hands. Then I said your all wrong. I ran an extra legal business in the
US. It was extra legal because I was 14, mowing lawns, had I followed the rule
of law I would have been deprived of business operating opportunity.

~~~
run4yourlives
Child Labour laws allowed you to work for yourself cutting lawns because you
didn't have to work 14 hours a day in a coal mine to help support your family.

~~~
yummyfajitas
Nonsense, economic growth did that. Economic growth is also the reason why
most adults don't work in coal mines for 14 hours/day.

Do you seriously believe that if child labor laws were abolished, children
would return to the coal mines?

~~~
krschultz
Do your seriously believe childhood education would have been as pervasive
without child labor laws? Only the richest could afford to send their child to
school if you have the opportunity cost of giving up their paychecks. After
child labor laws, what else are you kids going to do before they become old
enough to work?

~~~
yummyfajitas
In the era when paddy_m grew up (i.e., 1940-2000)? Almost certainly.

Incidentally, if families truly needed their children's paychecks, wouldn't
child labor laws merely consign them to starvation?

In reality, child labor laws merely mitigate a small problem: depraved parents
forcing their children to work for personal gain. (This is small in the sense
that not too many such parents exist.) But unless paddy_m's parents fall into
this category, child labor laws are irrelevant to him.

~~~
paddy_m
I'm 26. I started shovelling snow when I was 10, in 1992. When I was 13 I
started mowing lawns.

My parents never told me to go out and mow lawns. I wanted to. It was the best
thing I did for myself in my junior high and highschool years.

------
rapind
I really liked this article. Gave some great examples.

Anyone ever work on building a library that leaks? I bet most who've been in
IT for 5 years + have, and you knew it, even railed against it privately if
not vocally. Granted the direct negative effect it had on others may not have
been as dire as the example in this article, but I find it very similar in
principle. I've see millions of dollars wasted on bad services and products,
while everyone implementing, selling, and promoting them knows it.

It's ignored though, because they are hoping to spin it or sell it regardless
(and often do), or they feel they don't have enough influence to make a
difference. How many school books could be bought for these wastes?

I see a lot of comments about culture and corruption. I think it has far less
to do with culture than it does with species. I like simple answers though.

------
MaysonL
"Cities and the Wealth of Nations" by Jane Jacobs provides a much better
analysis of the causes of wealth. Poverty is the natural state: wealth is the
anomaly in the human condition. Most people in most places have always been
poor.

------
justindz
I kept thinking they missed one interesting point when discussing why Biya
might still be neglecting the roads after 20 years--the point at which it's
supposed to become in his interest to rebuild them so he has more to steal. If
the World Bank or other agency keeps giving them development money, they can
take from that instead of building the roads, so the incentive is gone. But,
if you remove the outside donations and the infrastructure is useless, you
remove all incentive for them to stay. Thus, you get a chaotic power vacuum.
If you were callous, you could think of this as a reboot, but with nasty
humanitarian consequences. If you keep donating from the outside, then you are
pretty much just funding the dictator.

Is that about right?

~~~
markessien
Your statement is a bit ignorant. You really think that the camerounian
government is financed by the world bank? You really think that the world bank
are just giving money to someone who is obviously using it all up? You think
that the president of the country as well as the entire team of economists at
the world bank have missed this great discovery you made?

The world bank is not a development fund, they lend money, they don't give it.
And countries like Cameron have a GDP of 40 billion USD a year, external money
is totally irrelevant to its survival. Most of these countries don't need
external money for the government to stay in power, they just take it because
it's free.

~~~
justindz
Yes, this is definitely out of my area of expertise. Fair criticism. Is there
a good resource to understand how the loans are repaid and what enforcement
exists? That would be crucial to understanding the degree to which they aren't
donations or couldn't be treated as donations even if they weren't.

And, no, I don't think Cameroon is financed by the World Bank. I just wrote
that poorly. I was interested in understanding whether the natural incentive
to build an economy to increase the scale of possible graft (not my theory,
from the article) could be killed by getting outside funding that, perversely,
wouldn't result in a more successful economy if it were being hoarded. Perhaps
that just doesn't happen.

------
dilanj
When in Mumbai, you send your driver to the DMV to get _you_ a drivers
license, along with the standard bribe for the inspector.

This would not happen if the cost of putting a bad driver on the road was so
high that the society would fight to prevent it. That would be the case if the
legal costs, repair costs and above all medical costs of an accident were
enormous. Like it is in the US.

But no, in India the government will bail you out if you get in a road
accident. They do that by providing free healthcare, maintaining low fines,
leaving glaring legal loopholes for your convenience and in most cases keeping
motor mechanics in a low income tax exempt category, so you can fix your
vehicle for dirt-cheap.

Hence you don’t care if a terrible driver is permitted to drive. Neither does
society at large.

Strong economies are driven by the duality of strong incentives and costly
penalties. Weak ones are undone by cultural and economical ecosystems built
solely for saving each other’s ass.

~~~
shiranaihito
> Hence you don’t care if a terrible driver is permitted to drive. Neither
> does society at large.

That's weird, because a bad driver can still _kill_ people. You'd think they'd
like to avoid that.

------
binarycheese
Having been to Douala myselft, I could'nt agree more. There is so much money
going around but the city (which happens to be one of the most expensive in
the world) is in ruins.

This is because of the centralized governments that France instituted in its
African colonies. Before a road is contructed/repaired, you must first get
authorization from central command (Yaounde)

------
nazgulnarsil
Corruption: 1\. What happens when bad incentives aren't identified and
eliminated.

------
known
"A country is not made of land; a country is made of its people." -- G.A.Rao

------
kqr2
I think the "broken windows" argument which was recently discussed in this
forum also comes into play.

In an environment where bribes are common place, this opens the door for more
corrupt behavior.

------
eru
If we could only virtualize the economy.. (Like in a VM for a computer.)

~~~
quantumhobbit
I've always wondered if this was possible, and whether it would be accurate.
With modern computers we could easily simulate 1000's of consumers and
producers. If the individual behavior of consumers could be modeled
accurately, we could have a realistic model of an economy. Granted modeling
consumers accurately is easier said than done.

~~~
LogicHoleFlaw
There is a large amount of study currently on virtual markets in things like
MMOs. What I haven't seen much in virtual economies is the ability to loan or
speculate, which drastically reduces some of the possibilities for economics
simulation. The one counterexample there was the Eve Online player who ran one
of the largest banks in the game, then absconded with everyone's money. The
lack of any sort of enforceable contract law made any sort of repercussions
difficult. Though, I wonder if his ship got blown up after that...

Personally I found it interesting when a game I play went through a large
deflationary period when the game developers cut down the currency in
circulation by aggressively banning exploiters and bots. It gave me a feel for
what the economic commentators are talking about now with the possibility of
impending deflation in the US.

~~~
snagage
The problem is that the US Fed is the ultimate gold farming bot. And it has
all the permission it needs from the GMs.

------
mynameishere
Because of the elephant in the room.

