The Wealth and Poverty of Nations: Why Some Are So Rich and Some So Poor
Holcombe, Randall G., Freeman
The Wealth and Poverty of Nations: Why Some Are So Rich and Some So Poor by David S. Landes
W.W. Norton & Company 1998 . 650 pages
Economic historian David Landes explains in this book why some nations are rich and some poor by appealing to the historical record. The history is fascinating, and Landes does a good job of relating the facts.
His explanation of the wealth and poverty of nations is simple: rich nations are oncepoor nations that developed market economies; poor nations are once- and stillpoor nations that did not. Market economies require governments that do not interfere with people's economic affairs except to protect property rights. Landes builds his case by recounting the history of world economic development.
Landes maintains that western European, and especially British, culture is superior to others at promoting people's well-being. He makes the same case for the virtues of Protestantism. The Roman church found truths about nature in the scripture, so new ideas were potentially subversive. Protestant culture gave individuals more freedom to think for themselves, to innovate, and to keep the rewards of their successes. The notion that one culture is as good as another is wrong, Landes argues, at least if one judges a culture by its ability to enhance the well-being of its practitioners.
This is a big book, so as you might expect, his argument is far more involved than this. Landes notes that geographical factors played a large role in the patterns of development, and that some areas had advantages due to climate and natural resources that enabled them to develop sooner than others. But he also argues that geographical advantages, in the long run, can be disadvantages, because if wealth comes too easily, people do not have as much incentive to work hard and to use their wealth productively. When the Europeans began settling the Americas, for example, the Spanish and Portuguese gained easy wealth through territory rich in gold and silver, whereas the British territory required more work and investment. That investment, however, produced a much greater long-run payoff. Similarly, Landes argues that the oil-rich countries in the Middle East today are squandering their wealth because they came by it too easily.
The same argument applies to the industrialization of Britain, which had some natural advantages, such as coal deposits, but lacked others and in any event could capitalize on its advantages only by hard work and innovation. …