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Why Are Some Countries Rich and Others Poor? (stlouisfed.org)
50 points by fern12 11 months ago | hide | past | web | favorite | 107 comments

As someone who migrated from a developing country(India) to a developed country(Australia) and observing the difference in quality of life of average citizens among the two countries, I always wonder why politicians/dictators from developing countries who can also observe these differences ever wonder that the average people in a developed country are living a good life so why not just copy what the developed country is doing and apply the similar policies back home to improve the lives of their own citizens.

Because usually what makes a society work is not really seen. I hate bureaucracy but an iron-clad property system and a lot of check and balance to reduce corruption are needed. And this can take decades to put in place as it requires a change in people's mentality.

What makes society work is very visible - society. The individuals that comprise the society. When they have resources (money, freedom, property ownership, etc) the society will grow. Also, population growth. If there are more people around then there will be more sold and thus produced.

Because controlling people, who are struggling in their life, are much easier by dictators. Even with religious activities, dictators can make citizens pray for him. if politicians allow you to have lots of chances, then you'll start criticizing and want more. More improvement on life conditions gives you less control on citizens.

I'm Turkish living in Switzerland, I can say that it is the same shit in every developing country and i can ensure you they won't be developed due to the facts that i mentioned above. We need really high numbers of citizens to break the borders.

Also, corruption. This is anectotal, but in the countries I've visisted, which include a hand full of ex Soviet republics, the median quality of life seemed to be negatively correlated with the amount of corruption.

I'm also Turkish, and believe me, when you have a dictator with his troll army, sucking the life out of the whole country, you'll wish you had the typical corrupt but manageable government from the 90s. The types we have these times would stand next to a kilometer-long list documenting their illegal business and say "we did what needs to be done for our great country" and everyone would cheer while you make escape plans. Hi from Germany(the risk of being falsely labeled as a teenager won't stop me: I<3🇩🇪).

Which means that usual ways of dealing with dicators, i.e. econimic sanctions are counterproductive. They make average people poorer, and then less likely to revolt against their dictator.

Taking communist Poland as an example, people start revolution not when things are worst for them economically, but, paradoxically, when things start getting better, but not fast enough.

Polish people revolted against communists in 1980, which was at the end of the decade of economic growth, fueled by money that Edward Gierek borrowed from western banks.

Something similar happened w.r.t. the French revolution.

This is a naive simplification. Why doesn't Infosys just copy Google and 10x its market cap? Big countries, like big companies, acquire a great deal of friction to get anything moving and institutions that make up the Goliath start getting riddled with corruption and mediocrity.

A policy change in itself can't change anything, unless, the change trickle down to the lowest level. And that rarely happens, because every level in the hierarchy has its own holes, inefficiencies, and corrupt practices.

The policy you are looking for is "defense".

Problem is developed countries don't want to see poor countries arm up. Especially w.r.t. nukes.

It's not a simple matter of policy. Culture and civilization are also important.

Take the contemporary Western assumptions that democracy is the best political system, the most natural system and one that ought to be implemented everywhere. Putting aside the question of whether these assumptions are true, consider that merely transplanting a democratic style of governance to a country of a different cultural and civilizational profile will not guarantee that that style of governance will function or last. Ultimately, democracy is a system that developed within the context of a particular variety of Western (particularly what Koneczny calls Latin) civilization. Whether democracy can survive for any meaningful length of time in any other civilization is not a given. It isn't even a given that it will survive in the West in its present form (its tenure has been rather short historically).

>I always wonder why politicians/dictators from developing countries who can also observe these differences ever wonder that the average people in a developed country are living a good life so why not just copy what the developed country is doing and apply the similar policies back home to improve the lives of their own citizens.

They very much do, but they almost always do it in a cargo-cult fashion, imitating the appearance of western progress while remaining ignorant of or uninterested in the underlying mechanics. Take for instance Julius Nyerere, well-intentioned as he was, driving his country into the ditch not once but twice by uncritically accepting foreign ideologies of communist collectivisation first and then unchecked capitalism second, apparently thinking either was some kind of white magic incantation that would bring about prosperity, completely ignoring the systemic factors at work with ordinary Tanzanians.

It also makes you wonder on the ideal size of a country and whether separate smaller nations or at least regions would be a better structure. Although large countries are the most powerful in the world, it doesn't seem to benefit the citizens very much.

It's also interesting that the 2 countries you mention are former British colonies but in the later the colonists essentially took over the ruling of the country and became the government. Essentially they did copy what what the developed country (Britain) was doing.

Path dependence, and trying to copy effects rather than causes.

No mention of colonialism or imperialism here. Not the whole answer, but part.

Japan and Germany were completely devastated after WWII, on a scale we have never witnessed in our lifetimes, yet they rose out of the Ashes.

So no, it's not colonialism.

It has to be something less visible. Something that a country like Afghanistan for example severely lacks.

You might point to dictatorships, but I would point to South and North Koreas.

South Korea was ruled by a brutal dictatorship for decades, in a way not so different from Egypt today. Yet that did not stop it from developing.

Even North Korea fares a lot better than many third world countries that have little to no enmities with their neighbors. I suspect the only reason North Korea sucks is because of the pressures/blockades imposed on it by the US (mostly for historical reasons).

After WWII, the US invested /massively/ in Germany. Also, many people were trained in some profession, so even though everthing was destroyed, they knew how to rebuild it.

Same with South Korea, which actually made a lot of money during the Vietnam war, as did Japan. Japan trade with Zeus boomed at that time, and Korea supplied 300 000 mercenaries. Before that North Korea was faring better economically than the south.

I believe Japan and Germanys still had an educated and skilled population. And working systems against corruption and rule of law in society.

I thought that was pretty amusing at first, but at least in Germany there was a system that could be resurrected after Hitler. In Japan, I don't know.

I say moderate weather and higher percentage of fertile land.

Indeed. How rich would Finland, Sweden, Austria, and Poland really be today had they never colonized Africa or subjugated and enslaved its industrious inhabitants, and how rich would Ethiopia be if it had been spared from the ravages of European rapacity?

It's hard to say. Some countries were rich before they were colonised and had all their riches stolen, others were poor to begin with. Ethiopia is actually often mentioned as the only country in Africa that wasn't colonised (though that's not entirely true), and has been rich and powerful in the past, but it poor now. One of the poorest countries in Africa, Mali, was once the home of one of the richest empires ever.

China has been the richest and most powerful countries in the world for 2000 years before European nations crippled it in the Opium Wars.

Finland was never a colonial power, by the way. Sweden was, but Finland was still largely tribal a bit over a century ago, and was kind of a colony of Sweden and Russia alternately. The rise of Finland to one of the most civilised countries in the world over the period of a century is really interesting.

I fear racism is also a big factor. White people in Finland are more likely to get a break from other white people than black people in Ethiopia are.

But culture is also a big factor. In Europe, the most powerful economies are in the traditionally protestant north, whereas the Catholic south tends to have somewhat weaker economies. But why? And why were Muslim countries rich, powerful and advanced in the Middle Ages, and now not anymore?

> Ethiopia is actually often mentioned as the only country in Africa that wasn't colonised

> Finland was never a colonial power, by the way.

That was the whole sarcastically made point of the grandparent comment. Rich non-colonizing states vs. poor non-colonized states.

You're probably right, but the grandparent wasn't entirely correct. Sweden has had colonies in both Africa and the Caribbean, and Ethiopia has been colonised, although both for only a fairly short period.

Colonisation obviously does play a role. It's ridiculous to claim that pillaging or oppressing another country doesn't hurt it, nor enrich the country that takes the profits. But it's not remotely the only factor at play. And the further in the past some events are, the more they get overshadowed by more recent history. I don't think Italy has much remaining benefit from the slaves the Roman Empire took from the Kelts they conquered.

Neither Finland nor Poland had any colonies nor they had "enslaved its industrious inhabitants". So your example itself counters your point that colonization and enslavement are necessary for prosperity of countries.

The European countries would quite likely be similarly rich if - if you look at such countries that didn't have colonies like Switzerland or Ireland, they've done ok.

The impact of colonialism is studied under the institutionalist approach to growth theory, with the two most proeminent recent authors being Acemoglu and Robinson. The submission doesn't elaborate on it, but the literature is out there.

I'm not sure what your comment is supposed to mean. Can you explain in such a way that a non-domain expert can better interpret it?

I'm not sure what you think I suppose to mean. The economic impact of colonialism is already an active area of study. I'm just pointing out that it exists.

    The impact of colonialism is studied
    under the institutionalist approach
    to growth theory
What is the institutionalist approach? What is growth theory?

    authors being Acemoglu and Robinson.

    The submission doesn't elaborate on it,
    but the literature is out there.
I'm not trying to be a smart-ass, but I'd like to know more after reading your comment than I did before.

Well, the submission itself has a section entitled "Institutions". Institutional economics is a field of economics that studies the impact of the strength, stability and overall design of "institutions", in the widest possible sense, on economic activity. Stuff like the impact of the credibility and strength of property rights or the impact of minority rule, for instance, goes in here.

Growth theory, or rather development economics, studies how and why wealth grows. And here go ... pretty much any economic growth models. I really don't know how else to say it.

Finally, an institutional approach to development economics studies how institutions might cause nations either grow or not, depending on their institutions, and the guys who kick-started this approach were Daron Acemoglu of MIT and James Robinson, of Chicago University. They have a book on it called "Why Nations Fail", released in 2012, which has already been recommended by another commenter. Their main thesis being that certain patterns of colonialism induce certain patterns of institutions, which they call "extractive", by which a minority appropriates most of a country's wealth for itself, while setting the country on a low growth path. The classic example being a resource-based economy under either a minority or authoritarian rule.

If this all sounds really general, that's because it is. I haven't read much on institutional economics, much less on the economics of colonialism. But I know it's out there.

Bravo, thank you.

LOL. And there we have the academic misdirection while brushing it under the carpet.

Well check the section about Korea, look at South Korea now.

Or East vs West Germany.

I'll save you all a click:

The article answers the question with the following two points:

- lack of strong institutions

- trade barriers

It provides an example of North vs south Korea in defense of the theory.

It's a ridiculously simplistic synthesis in my opinion.

This criticism is always so weird. What should the article - not thesis note, ARTICLE - have been: 10 times longer?

It is almost like people expect comprehensive, bulletproof writing in under 1000 words.

The criticism is not that the article should be more comprehensive, but that the title implies that it is.

Economists can sometimes be the equivalent to the priests of the past--basically making justifications for the ruling class.

I was once passionate about economics and public policy... If we are to be honest about it, at some point you just realize that the world is much less nice than I imagined, and it's that way because of people's greed.

That's not to say there aren't a fair good number of decent people out there, but those people are rarely found in powerful positions; and if they are, they are still susceptible to being corrupted.

The beauty about free market economics is, it doesn't depend on people's niceness to maximize productivity, capital utilization and consequently the aggregate standard of living of a country. Supply and demand, and pursueing self interest will achieve all of this in the aggregate despite any localized exceptions.

Unless you're powerful enough to make choices against the will of others.

There is an interesting series of wikileaks from European embassies showing American pressure on wide acceptance of GMO. It seems a lot of money and effort went into this. See for example this one:


> 8. (U) Spirnak's second lecture took place at the American Studies Center at Warsaw University. Approximately 20 students and faculty attended the lecture. Again, the students did not openly object to the idea of consuming GMO's but did reflect the typical European mistrust surrounding the issue. They asked about the purpose of altering the genetic structure of food, in what is essentially a "if it's not broken don't fix it" argument that is commonly made in Poland.

In other words, people are relatively happy with the crops and want to keep it that way. Then Americans come and are pushing the technology they're controlling down people's throats, reporting the results of their campaigns via diplomatic channels. People refuse, saying they're happy with what they have. Efforts continue - this time on EU level rather than lobbying individual countries.

The inconvenient truth is, gaining capital means gaining power. That power is exercised by taking specific decisions from the relatively small management board of a company and these decisions can have far-reaching effects not only on the company itself, but on society as a whole.

We believe voting is essential to run a democracy, yet the management of companies is far from being democratic.

All those good things like maximizing productivity, capital utilization etc are theory based on markets with perfect competition. How many "free markets" satisfy all the assumptions made about perfect competition?


Yea, exactly. But with effective regulation, we can get closer to perfect competition, or at least remedy the market failures that are inevitable.

To go on a bit of a rant--ufortunately it appears the trend is going the other way with Big Gov allied with Big Business, out of control banking empires and MIC, made possible by never-ending low interest rates and easy money policies from the Fed that mask it all.

Don't belive me? Real cost of living has increased to where 2 incomes are required for many to just keep their heads above water to afford what their parents had, despite more education and working longer hours. We have never ending wars, 26,000 bombs dropped last year, and the longest war in history and it was never even approved by congress. Our most popular media outlets tell us we need this so we have jobs[1].


That's the believe. The proof in the real world is quite lacking.

There is a lot of proof markets do work very well when you get close to perfect (and I'd add, fair) competition. Outside of that, things begin to break down quickly.

Hence the part about "real world" - yes, mathematically you can proof all this and it all looks nice and tidy, but all experience tells us that it doesn't work that way outside the lab.

"The system is perfect, the people are the problem."

But there are a lot of markets where it does get close enough that the assumptions are useful in modelling the world. Agricultural products, food and beverage industry, market for unskilled labourers, etc.

And in cases where there isn't perfect competition, many times good regulation can remedy the problems very effectively.

I am very critical of many of the kinds of groupthink that exists in economics, but the idea that markets can work well is really not such a bad idea, especially when you compare it to the alternatives.

> And in cases where there isn't perfect competition, many times good regulation can remedy the problems very effectively.

Then we agree, but that is the big point I see in this discussions "regulations are always bad, regulations destroy markets" and so on. Regulated markets are a useful tool. And like all tools they can be misused or overused.

    > The beauty about free market economics is, [etc]
So Economics is a science after all!

That's a simplistic view ignoring information asymmetries, externalities and natural monopolies.

I think you give too much credit to economists as propagandists. Pretty much any other kind of social scientist receives way more space in the media than economists do. And an educated layman seems way more likely to be acquainted with the Milgram experiments or with the Sapir-Whorf hypothesis than he is to be acquainted with comparative advantage. Specially today. Back in the 1970s you could have seen Milton Friedman and John Kenneth Galbraith exchange passive aggressions through their own TV series (respectively "Free to Choose" and "Age of Uncertainty"). I don't know of a contemporary equivalent.

Unless you literally mean that they're making justifications for the ruling class and have them as their captive audience. Which, I'm ... rather tempted to agree. Unfortunately, people have a self-serving bias, and like paying people to say what they want to hear.

> it's that way because of people's greed.

Came here to say this. The poverty and richness (this word doesn't sound right) of every country can be directly tied to the greed (or lack thereof) of 1 or more rulers, aristocrats, businessmen, dicatators, prime ministers, presidents = "ruling class".

That's all there is to it. No amount of analysis or economic theories, justifications or "studies" can hide that.

I "like" the use of North Korea as example of bad institutions and not of effect of embargoes. Likewise South Korea definitely did not receive (and properly used) foreign aid. /s

The article clearly contradicts itself on the point by showing how ineffective Qing dynasty policy reforms were in China while later even bigger changes in communist China worked.

And definitely does not address anything related to USSR or rise of the USA. Or further back, British empire. (Each employed very different policies was successful for a time.)

And then you have to look even further back...

Conclusions are therefore a joke toy model.

> Likewise South Korea definitely did not receive (and properly used) foreign aid.

South Korea did receive quite a lot of foreign aid from US, UN.

South Korea is the only nation to transition from receiver to giver in international aid. https://poldev.revues.org/1535

The '/s' at the end of that line denotes sarcasm.

Learning something new lol. No seriously. I missed it.

South Korea really did have the Greatest Generation. Those who were were adults during the war and those born around that time. Really.

I recommend everyone interested in this subject to read "Why Nations Fail: The Origins of Power, Prosperity, and Poverty" by Daron Acemoglu

It's a great book that tries to explain why.

I came across this 36 page lecture[0] with the same title in by another person with the author, for those who want some insight without buying the book.

Interesting to read, and it seems like it comes down to:

  - Because they have extractive political and economic institutions.

  - These are difficult to change though they can be successfully challenged and altered during critical junctures.

  - The roots of modern world inequality lie in the emergence of inclusive institutions in Britain and the fruits of this - the industrial revolution - spread to those parts of the world that had similar institutions (settler colonies) or quickly developed them (Western Europe).

  - Other parts of the world languished with extractive institutions which have persisted over time and thus remain poor today.
With caveats of:

  - History is not destiny.

  - Effective reforms towards inclusive institutions possible.

  - But it often necessitates a minor or major political revolution.

    Two examples:

      1 End of Southern equilibrium in the United States

      2 Botswana

I think I was drawn to this part in the lecture and started thinking about what modern day analogous of this could look like (Jamie Dimon's position on crypto-currencies as of late [specifically bitcoin] as modern day Sultan wrt firing employees trading such [and other well politically entrenched financial institutions around the world], DPI on internet networks by various nation states from blocking easy access to information, etc) :

  - In 1445 in the German city of Mainz, Johannes Gutenberg invented the printing press based on movable type. Spread rapidly throughout Western Europe.

  - In 1485, the Ottoman Sultan Bayezid II issued an edict to the effect that Muslims were expressly forbidden from printing in Arabic.
[0] http://www.lse.ac.uk/assets/richmedia/channels/publicLecture...

As a citizen of a developing country (Nepal) which has been haunted by its unstable politics, I'd still like to (partially)advocate that even less-developed nations(at least some) have invaluable resources (mostly natural) that the urbane nations can't renew for themselves. For instance, here in Nepal, there's a massive open market for tourism due to the remarkable landscapes(mountain ranges, "Everest", geographically blessed I'd say) & ancient cultural heritages(sacred Hinduism & Origin of Buddhism). Had there been a proper salutation of foreign indulgence in exploiting the resources over here, Nepal would have done much better. Hence, the political mayhem has led our country nowhere productive. :(

One important factor could be differences in intelligence. https://infogalactic.com/info/IQ_and_Global_Inequality

For the past century raw scores on IQ tests have been rising; this score increase is known as the "Flynn effect," named after Jim Flynn. In the United States, the increase was continuous and approximately linear from the earliest years of testing to about 1998 when the gains stopped and some tests even showed decreasing test scores. For example, in the United States the average scores of blacks on some IQ tests in 1995 were the same as the scores of whites in 1945.[61] As one pair of academics phrased it, "the typical African American today probably has a slightly higher IQ than the grandparents of today's average white American."[62]


IQ is a culture thing not a brain thing

Correlation, causation... Tomahto, tomayto...

I like to think that countries that are rich have figured out things about themselves that they have and are really needed by the rest of the world, and so they provide those services to the rest of the world for a price and use the proceeds from those services to develop the infrastructure and well-being of their country; for instance a very important well-being improving task is diversifying their economy, this they do to protect against unforeseen shifts in the global market.

The summary of this is that rich country figured out low hanging and easy fruits of services(for them that is, as if it was easy for others they could not hope to sell such services.) they could provide for a fortune and use those proceeds from those services to chase after high hanging fruits of services they could deliver to the world as those one's usually require intense capital.

Poor countries therefore either have not figured out services they could provide for the world or they have figured it out but are not investing the proceeds from it in the infrastructure and well-being of their country, being a Nigerian I would say most poor African countries are poor not because of the former but the later due to corruption,tribalism,e.t.c.

Wasn't there a significant divergence in fortunes as economies transformed from resource based to value added economies?

Around the turn of the XX century, many struggling economies today were on par with middling countries in Europe.

Think Czech, Finland, Hungary, Polen, Japan. Brazil, Mexico, etc., were competitive with them back then, but now, the latter are seen as basket cases of mismanagement. And empire and colonialism didn't give even Japan aby advantage till the 30s, arguably one could say that sapped their vigor. On the other hand LatAm had become independent from Iberian powers while inheriting a system of government (not the best but arguably better than monarchies), yet with the exceptions of Chile and Uruguay, the rest have underperformed.

Yes, there was. It is literally called "The Great Divergence".


Strange that you name Finland in a "basket cases of mismanagement". It is in world top20 by GDP/capita and often cited as having the best school system in whole world[0].

0. http://www.businessinsider.com/wef-ranking-of-best-school-sy...

> Strange that you name Finland in a "basket cases of mismanagement"

You misread the comment, that's not what they claimed.

Brazil became a basket case of mismanagement only since a few years ago, that isn't something they are doomed to forever. They are already well on the way to fix that.

By deposing a democratically elected president? Not Brazilian, but I'm not sure how this is 'fixing it'.

The key strength of the West, IMO, is, as others have said, the things you don't see. Trustworthy institutions that mean you're not always second-guessing whether or not something is as it seems.

That's why it's so important for us Westerners to be vigilant to attacks on the integrity of our institutions and systems.

Democratically elected, and democratically deposed. The March 2016 demonstrations were the largest in the history of Brazil, and for good reasons.

economics as a field seems to be poisoned with fuzzy thinking. this guy says that the division of korea is an experiment that shows the results of communism vs capitalism, essentially, and then concludes that the lack of a free market in NK is the reason that it is very poor. is it not relevant that north korea is currently and has been for quite some time the target of heavy sanctions by the united states and its allies? a centralized economy is perfectly capable of performing as well as a decentralized one, provided that it is centralized well. pointing to this implementation of a centralized economy does nothing to advance the argument against the viability of centralized economies.

this guy says that the output of people is what determines the wealth of a country. this confuses me a little because isnt it true that if all the countries in the world were filled with productive people, there might not be enough demand for all of their services? would a large chunk of people not be left behind? and, according to my introductory economics textbook, if such demand exists that every person on this earth can be employed at a high salary, would that demand not have already been naturally met in this global free market of nations that has existed for some time now? and lastly, here in the united states, a very rich country, most people have relatively meaningless jobs. people are wildly overpaid for the work that they do here in many cases. there are professors of womens studies and social network or engagement experts who are paid a lot of money to essentially do nothing. i would be happy to be corrected.

I gather you're of the belief that the economy is like a pie of fixed proportions to be divided rather than an ever changing pie which can grow bigger every year with productivity ?

I once read a wonderful thought experiment on the Mises page about a Dorothy sized storm. Imagine a tornado swept by and grabbed a large number of hard working and smart people randomly and placed them in a random town.

While people are temporarily shuffled, the brain surgeon(or some highly skilled technical person) is forced to pick up another trade like carpentry or any other less technical job in the meantime to provide and be productive in this new economy/town. The storm swept up and carried him elsewhere and so is temporarily stopping his highly skilled activity to become productive in some other one.

The same is to be said of the economy at large. People are shuffled due to many events and will never be at "full" productivity due to unforeseaable events, for example, a bad weather event. Jobs come and go. Same goes for industries. Even more so for trends.

Not just that nobody's helping and their system may be outdated, more powerful players are playing to keep them weak and use them as pieces in their competition with each other. The more powerful countries also don't really have an alternative, since stopping to compete means becoming weaker oneself, and helping others become stronger doesn't guarantee that they wouldn't become a new competiitor at the "big table".

Most rich countries are rich because they build their wealth on free labor (slavery), and this countries include USA, UK, France, Germany, Belgium, etc. Some are really poor because they've been exploited by the countries mentioned above (Africa and former German, British, Belgian, French colonies). Some are poorer because they've been destroyed by war multiple times (Poland).

This is an absurd generalisation. The only nation in your list that benefitted greatly from slave labour is the USA, and even that period is over a hundred and fifty years ago. Furthermore, the civil war that was waged to end slavery ultimately brought economic ruin to the southern States that had relied on slave labour.

In the post-WWII era, the countries that have prospered have done so because they have enjoyed stable government and long periods of peaceful relations with their neighbours. This allows for an educated populace, fruitful use of their natural resources and human ingenuity, and remunerative trade with other nations.

>> The only nation in your list that benefitted greatly from slave labour is the USA

I do not know for other countries but in France what is told in schools and in media is that France had abolished slavery in 1794.

However it had slavery inscribed in its legal system for West Africa up until the beginning of the 20th century.

Even in metropolitan France, slavery was reinstated by Napoleon in 1802 and was not abolished for good until 1848 (in metropolitan France!).

In west Africa it was only in the beginning of the XX century that an end of slavery was declared by the colonial French administration ( 1905 in Mauritania).

In African states like Mali that are still controlled by France, at least by its military forces and its financial system (CFA/West African Franc), slavery was only legally forbidden in 2003.

You write: "The only nation in your list that benefitted greatly from slave labour is the USA".

Quoting https://en.wikipedia.org/wiki/Slavery_in_Britain#Triangular_... :

> By the 18th century, the slave trade became a major economic mainstay for such cities as Bristol, Liverpool and Glasgow, engaged in the so-called "Triangular trade".

Further details from https://en.wikipedia.org/wiki/Atlantic_slave_trade :

> Bristol and Liverpool merchants became increasingly involved in the trade.[92] By the late 17th century, one out of every four ships that left Liverpool harbour was a slave trading ship.[93] Much of the wealth on which the city of Manchester, and surrounding towns, was built in the late 18th century, and for much of the 19th century, was based on the processing of slave-picked cotton and manufacture of cloth.[94] Other British cities also profited from the slave trade. Birmingham, the largest gun-producing town in Britain at the time, supplied guns to be traded for slaves.[95] 75% of all sugar produced in the plantations was sent to London, and much of it was consumed in the highly lucrative coffee houses there. ...

> By far the most financially profitable West Indian colonies in 1800 belonged to the United Kingdom. ...

> It has been estimated that the profits of the slave trade and of West Indian plantations created up to one-in-twenty of every pound circulating in the British economy at the time of the Industrial Revolution in the latter half of the 18th century

Thank you for your excellent reply. I stand corrected that regard.

However, the fact that the period to which your refer is some 250 years in the past supports my wider point that it is specious to claim that the the wealth of current-day first world nations derives from the historic use of slave labour.

Do you still consider it an "absurd generalization"?

How many years does it take for the benefits of slavery to disappear? I think it's far longer than you do.

British slavery meant more income to the government, which lead to a better navy, which lead to the ability to defend the triangle trade. A better navy helped advance British imperialism. How might Trafalgar have turned out with a weaker British navy?

British control of sugar production was built on slavery. But even once the slaves were free in a legal sense, the black population of ex-slaves was still at the bottom of the social ladder. The white landowners kept political and economic control for generations, and the profits went to Britain.

In the US, institutionalized racism, not just in localized Jim Crow laws and sundown towns, but also in federal policies like redlining, prevented generations of blacks from getting the same economic benefits as whites. (See Richard Rothstein's “The Color of Law”; interview at http://www.npr.org/2017/05/03/526655831/a-forgotten-history-... .) I know less about British history, but I do know how many thought the "Anglo-Saxon race" was above all others.

You earlier wrote: "Furthermore, the civil war that was waged to end slavery ultimately brought economic ruin to the southern States that had relied on slave labour."

I don't think you appreciate the full impact of slavery on the US or British economies. Quoting https://en.wikipedia.org/wiki/Slavery_in_the_United_States#A... :

> slavery was entwined with the national economy; for instance, the banking, shipping and manufacturing industries of New York City all had strong economic interests in slavery, as did similar industries in other major port cities in the North. The northern textile mills in New York and New England processed Southern cotton and manufactured clothes to outfit slaves. By 1822 half of New York City's exports were related to cotton

and from https://en.wikipedia.org/wiki/King_Cotton#History

> By 1860, on the eve of the American Civil War, cotton accounted for almost 60% of American exports, representing a total value of nearly $200 million a year.

Even though slavery was banned in the British Empire, Britain still profited from slave labor carried out elsewhere. The cotton mills of Lancashire produced a huge fraction of the world's processed cotton. You know where that cotton came from? The forced labor of American slaves.

Quoting now from https://en.wikipedia.org/wiki/Lancashire_Cotton_Famine :

> When the slave-owning Southern States of America demanded secession from the United States of America and declared war in 1861, the cotton supply was interrupted at first by a Southern imposed boycott and then a Union blockade. The South's thinking was that it could force British support through an economic boycott. ... Of the 1,390,938,752 lb of raw cotton 1,115,890,608 lb came from America.(80 %) ... Confederate flags were flown in many cotton towns.

Britain's economy profited from American slavery even until the 1860s, and they knew it.

> Do you still consider it an "absurd generalization"?

Yes, I do. I concede that you have demonstrated that economic benefits from slave labour continued to accrue to the UK economy until the 19th century. However, it is simply not true to flatly claim, as did the OP, that "Most rich countries are rich because they build their wealth on free labor (slavery)".

I do think the original statement is wrong. Many of the rich countries are rich because of oil, not slavery. These include Norway, the UAE, Kuwait, Saudi Arabia, Qatar, and Brunei.

Still, I do not find it an absurd generalization.

How many rich countries do you think are rich because they built their wealth on slavery?

While it's not slavery, does that number change if it were generalized to include indentured servitude or forced labor?

For example, Belgium benefited from forced labor in the Belgium Congo. Quoting https://en.wikipedia.org/wiki/Belgian_Congo :

> After the First World War, ... the colonial state gave private companies, to a large extent, a free hand. This allowed, in particular, the Belgian Société Générale to build up an economic empire in the colony. Huge profits were generated[by whom?] and for a large part siphoned off to Europe in the form of dividends. ...

> The necessary work-force was recruited in the interior of the vast colony with the active support of the territorial administration. In many cases, this amounted to forced labour, as in many villages minimum quotas of "able-bodied workers" to be recruited were enforced. In this way, tens of thousands of workers were transferred from the interior to the sparsely populated copper belt in the south (Katanga) to work in the mines. In agriculture, too, the colonial state forced a drastic rationalisation of production. The state took over so-called "vacant lands" (land not directly used by local tribes) and redistributed the territory to European companies, to individual white landowners (colons), or to the missions ...

> During the First World War (1914-1918), the system of "mandatory cultivation" (cultures obligatoires) was introduced, forcing Congolese peasants to grow certain cash crops (cotton, coffee, groundnuts) destined as commodities for export.[31] Territorial administrators and state agronomists had the task of supervising and, if necessary, sanctioning those peasants who evaded the hated mandatory cultivation

The Netherlands. Quoting from http://www.counterfire.org/index.php/articles/book-reviews/1...

> The Dutch role in the slave trade is said to be minor, but Kwame Nimako shows that although the Dutch colonies in the Americas might have been few and small compared to the Spanish, Portuguese and British colonies, the Dutch were, because of their well-built vessels and good seamanship, very active in the actual transport of slaves both for their own colonies and for others. Between 1600-1650 the Netherlands replaced Britain as the second major transatlantic transporter ...

> The state was very much involved in the slave trade: brokerage and pilot fees were required by the state, gifts to rulers were sometimes required, permits had to be purchased and agreements with other enslaving nations were made. There was government protection of sugar refining between 1650-1680 (p.73). The slave ships required a crew twice the size of a normal commercial ship, since ‘unwilling passengers’ might revolt. The transportation of slaves was never a normal business but needed state support. ‘The treaties that shaped the formation of some of the major European states in the seventeenth and eighteenth centuries were tied to control of or negation about the Atlantic slave trade, annexation and colonisation of other people’s land and subjugation of other people’ ...

> The Dutch colonies of Suriname and the Dutch Antilles had their complement of slaves, though these were fewer in number than in the British colonies. ...

> Unlike Britain, in Holland there was no movement for the abolition of slavery. The Dutch ignored the 1794 French declaration of liberty for slaves, even though they adopted many French laws when under French control in the Napoleonic period. ...

> Nimako shows that, contrary to supposition, the Dutch still found slavery profitable at the time of abolition, since they deferred the latter until after the produce had been harvested. Further, the slave-owners wanted compensation for the loss of their slaves after abolition. The enslavers were compensated, but the former slaves received nothing, not even the much smaller amount they were supposed to receive. In fact the compensation granted to the enslavers came from the enslaved and most went not to the colonies but to slave owners living in the Netherlands

And the French economy. Quoting from http://discoveringbristol.org.uk/slavery/routes/places-invol... :

> French traders were heavily involved in the slave trade. From 1721-30, French ships took 85,000 enslaved Africans to the plantations in the Americas and the Caribbean. In the 1730s, they carried more than 100,000. Altogether, about 1,250,000 enslaved Africans were taken by French ships. Even after France abolished the trade, 500 French ships continued slave trading illegally between 1818 and 1831.

Quoting now from https://www.washingtonpost.com/world/europe/france-confronts... :

> In the 18th and 19th centuries, France was among the major European slave-trading nations, capturing and selling an estimated 1.4 million people before leaders outlawed slavery in 1848.

> The country’s coffers grew rich from colonial conquests in Africa, Southeast Asia and the Caribbean, where slave labor generated the commodities that French merchants then sold in Europe.

> When metropolitan France finally outlawed slavery — a generation before the United States — liberation brought freedom only in theory for many blacks in French territories overseas.

> “Slavery was abolished, and the old slaves became citizens,” said the historian Frédéric Regent, a renowned expert on the French slave trade. “They even elected deputies. But the plantation economy continued with the same masters, who then became ‘employers.’ ”

> “What was different between that and slavery?” Tin asked. “Nothing.”

> This form of economic subjugation overseas persisted well into the 1960s, when France, crippled by two world wars, lost its former empire. Many argue that the injustice persists today in the form of socioeconomic disparity between young whites and blacks, increasingly confined to peripheral suburbs and low-paying jobs.

> “It’s from slavery that we have the discrimination we have today and the racism we see in France today,” said Myriam Cottias, a historian and member of the government-sponsored foundation, in a telephone interview from Martinique.

> “It’s not yet totally done in France. France has many, many institutional links to slavery.”

Yet again, even though slavery was officially abolished, the "economic benefits from slave labour continued to accrue". Even to the present.

I note that the examples that you cite above are all nations that were relatively wealthy to begin with. They did not suddenly lift themselves out of poverty in the 17th century by enslaving Africans. Rather, their advanced technology and capital resources enabled them to dominate and exploit other populations, either through slave trading or colonisation. In doing this, they did further enrich themselves, true, but to state that this shameful period is actually the wellspring from which these nations' wealth derives in the 21st century is dramatic overreach.

My objection is to your statement that it's absurd.

I agree that it's an exaggeration, and even that it's wrong, but it's not absurd.

The further back in time you go, the more the framework changes. How did those nations become relatively wealthy in the first place?

How much was due to serfdom? Combined, of course, with the new political philosophy which centralized absolute power for the sovereign.

(As https://en.wikipedia.org/wiki/Supplementary_Convention_on_th... helpfully points out, the United Nations 1956 Supplementary Convention on the Abolition of Slavery also prohibits serfdom.)

But by doing that, the problem is that most areas in Europe had serfs. I think in Europe only some of the Nordic countries did not. (On the original topic, Sweden's era as a great power was funded by its copper export, and not from slaves or serfs.) And many cultures had slaves or participated in the slave trade, including those that weren't great powers, so slavery, serfdom, and other forms of forced labor are not really diagnostic.

Do you have an idea of how much of the those nations' wealth derives from slavery? I don't think it's an easy thing to answer. It's clearly not "zero".

Assume that all these countries have had different levels of exposure to slavery, meaning the total amount of GDP can be attributed to slavery, and that would be thus lost if they abolished slavery and refused to trade with companies or individuals which use slavery (e.g. place an embargo on American cotton unless it's certified).

I mean, it's a fair assumption: slavery was abolished in France in 1794, in the United Kingdom in 1833 and in the United States in 1865. Germany mainly traded with it's European neighbors, which didn't use slave labor in their territories.

Then how can all these different countries have similar levels of GDP per capita and similar growth paths, despite their different levels of exposure?

Furthermore, there currently poor countries which relied on slave labor for much longer. Brazil only abolished slavery in 1888. Morocco, in 1922. And if we include serfdom, Russia, in 1861.

Unless you mean metaphorical slavery.

I grant that it would take much more sophisticated analysis in order to properly exclude any confounding factors, but that's kinda the point, really. I don't think you really thought this through.

> Most rich countries are rich because they build their wealth on free labor (slavery), and this countries include USA, UK, France, Germany, Belgium, etc

Don't stop there. Throw in Austria, Switzerland, Finland, Sweden, Norway, the Czech Republic, Slovakia, Croatia, Hungry, etc.

> Some are really poor because they've been exploited by the countries mentioned above (Africa and former German, British, Belgian, French colonies

Including Ethiopia, right?

> Some are poorer because they've been destroyed by war multiple times (Poland).

Poland is poorer, but not poor. It's in the top 50 of countries ranked by GDP adjusted for PPP: https://en.wikipedia.org/wiki/List_of_countries_by_past_and_...

Please, make your facts straight. It's not the first time in this thread you blame countries for their colonial past that have never had any colonies:

Switzerland, Finland, Czech Republic, Slovakia, Croatia -- none of them had colonies.


That's not even a country (though can't argue that it would be a fun name).

Poe's law in action.

Well in the USA you can thank the Democrats for that: the 13th Amendment, banning slavery, was passed with 100% Republican support and only 23% Democrat support :-)

Kind of ironic to hear the Democrats wringing their hands now out of "compassion" for the oppressed people...

Why don't countries just merge or join each other? Doesn't all the division simply create more fear and us VS them.

Cultural differences and tendency for bigger cultures to push theirs onto smaller cultures.

Source: living in a country that run away from bigger brother few decades ago.

To put it a bit colorful: Because in the Game of Nations many people want to be King. To have many Kings you need many Kingdoms. Also Unity makes you strong and usually your enemies will do whatever they can to divide and conquer.

More like people don't like when people from far away try to enforce seemingly stupid laws. Having a vote that actually matters is awesome.

The other question is how those tiny kingdoms organise into bigger structures to have economy-of-scale, while still retaining their sovereignty on internal matters.

Yeah, that usually ends well, as we have seen in history. /sarcasm

Just look at Austro-Hungarian Empire, Yugoslavia, etc. You can't force cultures to merge, a problem also acutely experienced in the EU at the moment.

They're kind of trying that with the EU. Mixed results.

I think it just happens randomly, and here is the answer about the mechanism: https://www.youtube.com/watch?v=iyHVwUe66qw

Why are there bigger numbers and smaller numbers?

Ahh, productivity. You'll be highly productive deforesting your lands, I'll be highly productive in selling pop-culture to the entire world. I get wood and you get obese. Deal?

There must be a definition of rich and poor. It should not be devised by looking at the wealth. It should be devised by looking at the living standards, education system, environment, law and order, equality, zero racism. And where people can live an anxiety/depression free life. Where there is welfare, care, love grows everyday for each other.

One metric come across in these discussions is 'GNH' - Gross National Happiness https://en.wikipedia.org/wiki/Gross_National_Happiness

Sadly, that defines one race countries. No racism possible when there are no races but one.

Personally, I think this definition is bad because it progress free. Anxiety free is has no scale. If you are massively anxious I. Country A, and mildly anxious in B, both fail.

Need to rethink this.

There still seems a fair bit of racism in mostly one race countries, say Japan for example. There seems less in widely mixed places, say London or Singapore.

Yeah, London, where not being of the "correct" religion can get you killed in some areas! (I know, religion is not a race, etc....my point is that mixed places are not necessarily more tolerant)

The zero racism part is not gonna slide with the so-called developed countries

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