Tuesday, March 13, 2012

All You Need to be Rich....

Is to be poor. A bit simplistic, perhaps?
Economists have long known about “Dutch disease,” which happens when a country becomes so dependent on exporting natural resources that its currency soars in value and, as a result, its domestic manufacturing gets crushed as cheap imports flood in and exports become too expensive. What the PISA team is revealing is a related disease: societies that get addicted to their natural resources seem to develop parents and young people who lose some of the instincts, habits and incentives for doing homework and honing skills....

Or as my Indian-American friend K. R. Sridhar, the founder of the Silicon Valley fuel-cell company Bloom Energy, likes to say, “When you don’t have resources, you become resourceful.”

That’s why the foreign countries with the most companies listed on the Nasdaq are Israel, China/Hong Kong, Taiwan, India, South Korea and Singapore — none of which can live off natural resources.
Wouldn't it be interesting if poor nations, instead of being poor, were... rich? And yet for some reason they're not.

It's pretty amazing to me that Friedman can hear somebody explain that countries like "Canada, Australia and Norway, also countries with high levels of natural resources, still score well on PISA, in large part... because all three countries have established deliberate policies of saving and investing these resource rents, and not just consuming them", and have that be his takeaway. If you look at nations hit by the resource curse, how often do you find a nation where everybody has a pretty good standard of living? How often do you find, on the other hand, a country with weak institutions of government, kleptocratic leadership, and a population that for the most part lives in conditions somewhere between dismal and squalid?

As is his wont, Friedman also disregards the inequality of opportunity in nations like India and China, the extent to which large numbers of people in those countries have been treated, in effect, as natural resources - cheap labor for international companies. He seems to have retreated into his fantasy world in which any population, no matter how poorly governed, impoverished, downtrodden and oppressed, could transform itself into another Singapore within the space of a few years.
What the PISA team is revealing is a related disease: societies that get addicted to their natural resources seem to develop parents and young people who lose some of the instincts, habits and incentives for doing homework and honing skills.
Say what? Let's turn to the list of nations Friedman singles out as being resource-rich but faring badly on PISA: Qatar, Kazakhstan, Saudi Arabia, Kuwait, Oman, Algeria, Bahrain, Iran and Syria. Exactly when was it that those nations had the emphasis on education - the "instincts, habits and incentives for doing homework and honing skills" - that Friedman would have us believe that they "lost" when they discovered their natural resources? Perhaps this reflects the fantasy thinking that led Friedman to believe that Iraq could be turned into a progressive democracy within a few years of a military invasion - the extent to which a nation's culture, history, governance, and the population's present education level factor into its chances of flourishing and producing a population of highly educated, innovative citizens.

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