A Journal for Western Man

 

Suspected Economic Laws in the Real World

Fred Reed

Issue CV - June 16, 2007

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Principal Index

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Old Superstructure

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Old Master Index

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Contributors

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The Rational Business Journal

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Forum

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Yahoo! Group

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Gallery of Rational Art

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Online Store

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Henry Ford Award

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Johannes Gutenberg Award

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CMFF: Fight Death

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Eden against the Colossus

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A Rational Cosmology

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Implied Consent

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Links

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Mr. Stolyarov's Articles on Helium.com

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Mr. Stolyarov's Articles on Associated Content

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Mr. Stolyarov's Articles on GrasstopsUSA.com

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Submit/Contact

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Statement of Policy

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Why are Third-World countries poor, while those in the First World arenít? (The phrase ďthird worldĒ is a tad shaky, embracing as it seems to Taiwan, Thailand, and Mexico, and also Haiti and Zaire. We will use it for convenience.)

The standard explanation in the Third World is that the West, chiefly the United States, exploits them, buying their raw materials and selling them manufactured goods. Everything is someone elseís fault. The reasons, I think, are otherwise. The advanced nations will exploit anyone they can, but this hasnít kept Japan, Singapore, Taiwan, Argentina, and many other countries from prospering.

Start with corruption. In many poor countries, virtually everything is for sale. You can bribe the cops to get out of a ticket or bribe them to beat up an enemy, bribe a general in the army to overlook illegal logging, bribe anybody to do anything. The result is that really the country barely has laws, which means that you can never be sure of your legal ground. Businesses need predictability.

Corruption exists in advanced counters, but there is less of it, and it tends to take organized form, as in campaign contributions, affirmative action, and seats of boards of directors after leaving office.

Suspected Economic Law: The easier it is to bribe a working-stiff cop, the poorer the country.

Sheer governmental inefficiency has much to do with it. When I was in Taiwan many years ago, when the country was first developing, I talked to an American businessman about Asia. Taiwan, he said, had Enterprise Zones, fenced regions with buildings and utilities in place. You signed one document, brought in your machinery, hired workers, and started production.

In Thailand, he said (it may no longer be true) you had to negotiate for months with the Interior Ministry to get land, then months with the Labor Ministry, then months, then months, meanwhile bribing everybody right and left. Iíve got the names of the ministries wrong, but you get the point.

Suspected Economic Law: Prosperity varies inversely with the time between beginning negotiations to open a factory and getting first product.

While inefficient government retards economic progress, it doesnít follow that countries with inefficient governments will always be poor. Industry in the United States has been so productive that, although the government is worse than useless, the country can withstand it.

A serious obstacle to prosperity is Half-Assedness, a quality not widely recognized in econometrics but well known to experienced travelers. Half-Assedness is a curious mixture of just not giving a damn, lack of ambition, little interest in academics, and sometimes something that looks like lethargy.

You go into houses and never see books. A man will start a garage to repair cars for a living. He wonít think of expanding and owning a chain of garages. His family has enough to eat, so why do more? The young, though they could pursue school beyond some pre-high school level, donít. They marry early instead of establishing themselves first. They live in the present, whereas people in rich countries have one foot in the future. An American thinks college, grad school, career. He is going somewhere, or trying to. He may not adhere to his plan, but he has one.

An element of Half-Assedness is a slack attitude toward maintenance. People who could easily afford nineteen cents for a brake-light bulb donít. They throw trash in the streets. Potholes go unrepaired for years.

Suspected Economic Law: National income is inversely proportional to the amount of trash in the streets.

Another aspect of Half-Assedness is an incapacity to attach importance to time. This comes in two flavors, wholesale and retail. At the wholesale level, an American thinks, ďOh my god, Iím thirty and haven't made partner.Ē A Third-Worlder lacks any sense of urgency. He sees existence as a period through which one passes instead of an interval in which one does things.

At timeís retail level, Third-Worlders think that four oíclock means anywhere from five-thirty to not at all. It isnít rudeness or inconsideration. If you do it to them, they wonít be offended. By contrast, an American reporter, say, knows that if his nine-oíclock interview happens at nine, the one at eleven will be possible, and the business lunch will come off on time, so that he can hit the computer by three and file at five. It works. Americans show up ten minutes early and wait. In the Third World, writing the same story would take three days instead of one.

Suspected Economic law: Per capita income correlates inversely with the average number of minutes by which people miss appointments.

In the Third World there is a different attitude to commerce. An American businessman is likely to give a new client a good price, or at least the going price, in hopes of acquiring him as a regular customer. If in the Third World a European gets a haircut without asking the price, he will be charged eight dollars when the correct price is four dollars. He will never come back.

This is normal third-world economicsógouge the customer to the max without thought of the future. The practice is encouraged by the reliance on haggling in poor countries. I have sometimes wondered whether this doesnít make tricking the customer more important than having a good product.

Suspected Economic Law: Countries that bargain have less money than those that donít.

The what-me-care attitude can be, to an American, incomprehensible. You want a roof job that would cost several thousand dollars, a lot of money in many countries. The workmen promise to come the next day to give you an estimate. They donít show. You call, and they say, well, my car broke. Next day, same thing. They got to your town but couldnít find the house. And so on. So you go to Wal-Mart or Home Depot or some similar First-World enterprise and get the job done.

Another element of Half-Assedness is, depending on your politics, cultural or inherent, but unmistakable. Some populations just arenít very bright, or at any rate donít seem to be. Sub-Saharan Africa, though rich in resources, is pea-turkey poor and not improving. Arab countries, even when awash in oil money, do not establish First World societies that could survive without oil. In South America the white countries, such as Chile and Argentina, could be in Europe. The highly Indian countries, as for example Bolivia and Peru, would be basket cases if they could afford the basket.

Suspected Economic Law: The more European or East Asian blood, the more money.

Thatís Fred on economics. Lynch mobs may take a number.

Fred Reed has worked on the staff of the Army Times, The Washingtonian, Soldier of Fortune, Federal Computer Week, and The Washington Times, and has been published in Playboy, The Wall Street Journal, The Washington Post, Harper's, National Review, Signal, and Air&Space. He has served in the Marines, worked as a police writer, technology editor, military specialist, and as an authority on mercenary soldiers. See Fred's homepage, Fred On Everything.

This TRA feature has been edited in accordance with TRAís Statement of Policy.

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