The Shawnee News-Star
  • Why nations fail: Part VIII

  • In “The Measure of a Nation,” Friedman names five dimensions of human welfare and rights key to national success: health, safety, security, education, democracy and political participation, and equity and equality. [1]
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    Income is required to achieve all of them, therefore, I have used it as a proxy for national success.
    My analysis uses the CIA’s measure of income (GDP per capita) of 228 nations.
    A world map with colors indicating their respective national incomes displays no wealthy nations in the southern hemisphere and most clustered in the northern temperate zone.
    Habitation and work are impossible in polar regions and unpleasant and unhealthy in the tropics.
    But China and India are poor, and they are in the same temperate zone as wealthy nations, so geography is not destiny.
    Almost all wealthy nations are in the west or westernized e.g., USA, Canada, Australia, EU nations, Japan, Taiwan and South Korea. [2]
    City-states like Hong Kong and Singapore are highly westernized, and wealthy islands are typically made wealthy by tourists and tax-dodgers from the West.
    Countries reaping easy riches from natural resources (oil, diamonds, rare earth metals) suffer from the “resource curse.” They are typically dictatorships whose family and friends receive most of the money surrounded by impoverished citizens.
    Four of the top 20 wealthiest nations are in the Persian Gulf. [3]
    Totalitarianism and Pluralism
    The end of colonialism in the 40s brought political freedom in most colonized nations, but its replacement by communism a decade later simply brought new dictators.
    Because colonialism prevented the development of civil society, it has taken decades for some former colonies to develop.
    Socialism was briefly tried and failed in Jamestown, Plymouth, and for 72 years in the USSR.
    After its fall in 1991, those of its former satellite states that returned to Western capitalism have prospered, and those that retained communist tendencies have languished.
    Communism and Islamic states present a near-total fusion of political, ideological, and economic hierarchies monopolizing all important decisions.
    In such totalitarian societies, there are many ways of putting a foot wrong that keep a man always at risk.
    Islam combines the theocentrism of Christianity with the legalism of Judaism. The result is a legal blueprint of social order which stands above mere power and political authority. Religion is above all the Constitutional law and society. [4]
    With its monopoly of legitimate violence, the nation’s government and political institutions determine its economic institutions.
    Exclusive political institutions keep power concentrated in the hands of a ruling elite.
    For prosperity, a state must be centralized enough to bring about order and safety but decentralized enough to protect citizens from incursions on their individual rights.
    Page 2 of 3 - The American constitution contains features that oppose or counteract each other to achieve this delicate balance in which order and freedom flourish.
    American society is “pluralist,” meaning citizens organize in diverse, competing non-government organizations.
    No single ideology or organization encompasses the political, economic and social aspects of society.
    People think and arrange their associations and activities in many arenas arrayed with and against others, and in the social and ideological space thus this provides, individual freedom and civil society flourish.
    Institutions Bringing Wealth [5]
    Religion is the most fundamental institution of any society and underlies culture and most civilizations, but when church and state are intertwined, it inhibits economic enterprise and wealth accumulation.
    Jesus advised his disciples to keep church and state separate. [Mt.22:21]
    When church and state marched together, it was bad for them and their colonies.
    The third leg, economic institutions, require as a pre-condition a civil society defined as that set of diverse non-governmental institutions strong enough to counterbalance the state and preventing it from dominating the rest of society. (Churches, civic groups, political parties, charities, etc.)
    Civil society cannot arise if church and state are intertwined and the political system is exclusive. That’s why Islamist societies languish.
    The most necessary institution for producing wealth is private property.
    Socialism doesn’t work because workers and owners must receive rewards commensurate with contributions, and not have their property stolen or taxed away.
    Also required are a rule of law, free and fair product markets that permit entry of new businesses, and labor markets allowing people freedom to choose their careers.
    Such an economy results in a large middle-class capable of gaining good government.
    The Spanish colonial system was extractive and doomed its colonies to poverty.
    The Future
    Mexico is a poor, corrupt narco-state, but, they are changing. They are our third largest trading partner.
    Tijuana has high-skilled but low-paid workers assembling products moved across the border from its American sister city, San Diego.
    This “quick sourcing” system is spreading to other border towns and bringing jobs back from China. [5]
    Truth undermines respect for any authority system.
    Once leaders and led alike in the Soviet Union learned the truth of socialism’s failure and success of western government and economic system, it set them free.
    Once Gorbachev started “glasnost,” letting in the light of truth from the outside world, there was no stopping the process of change.
    A totalitarian state can’t half liberalize any more than one can be half-pregnant.
    China’s state capitalism is an oxymoron. They can’t have our economy without our democratic government and pluralist society.
    Page 3 of 3 - Ditto for Cuba as they take baby steps toward a free market economy.
    I’m optimistic.
    [1] Friedman, H.S., ‘The Measure of a Nation,’ Amherst: Prometheus Books,2012.
    [2] Ferguson, Niall, Civilization: The West and the Rest, Penguin Books, 2011.
    [3] Maas, Peter, Crude World: The Violent Twilight of Oil, NY: Alfred A. Knopf, 2009.pp6, 206-7.
    [4] Gellner, Ernest, Conditions of Liberty, NY: Penguin Press, 1994, pp.5-7; ch.3.
    [5] Acemoglu, Daron, and James A. Robinson, Why Nations Fail: The Origins of Power, Prosperity, and Poverty, NY: Crown Business Books, 2012, Ch. 2.
    [6] Anderson, Chris, “Mexico, the new China,” NYT, Jan. 27, 2013.
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