Thomas Sowell, Explaining large disparities in economic development

While economic development has been more or less taken for granted in much of the Western world since the industrial revolution of the eighteenth and nineteenth centuries, this has not been so in all places and all times—and it was not so in the West for many centuries before then. In some other parts of the world, even in the twentieth century, farmers continued to farm and fishermen continued to fish in much the same way as their ancestors had centuries earlier, leading to standards of living not very different from what they had been in ancient times.

In short, economic development has never been automatic. Why it has been greater in some places than in others, and at some times rather than others, is a question of great practical importance for the economic fate of billions of human beings today, though it is a question for which no single answer is likely to explain everything. Technology has had much to do with it, though not everything. Similarly for geography, natural resources, and other factors, including the hu- man factor. As in other areas of economics, attempts to understand certain basic realities are made more difficult by the distractions of popular myths and misconceptions.

The striking and even shocking differences in economic development seen in many parts of the contemporary world have led many to develop, or be drawn to, sweeping and often melodramatic theories that claim to explain such economic contrasts. Yet such economic contrasts have been common throughout history.

Ancient China was so far in advance of Europe that, while there was a great demand among Europeans for silk, chinaware (the name is significant) and other exotic products, the Europeans produced nothing comparable to trade and so had to pay in gold for what they bought from China. Within Europe, the contrasts have been equally great. When the ancient Greeks had monumental architecture that is still imitated today and landmark intellectual figures like Plato and Aristotle, illiteracy was common across much of northern Europe and there was not a single building in all of Britain when the Romans invaded in the second century A.D., nor had a single Briton’s name yet entered the pages of history.

The contrast today between the wealth of Western countries and the poverty of the Third World is nothing new… It is not simply that some people may be economically more fortunate because of the geographical setting in which they happen to live at a given time. More fundamentally, they themselves can become enduringly different people, partly as a result of their broader cultural contacts and the expanded universe of human ex perience on which they can draw…

All the numerous and interacting factors behind economic development make it virtually impossible that different parts of the world would all have equal development, and therefore equal standards of living, at any given time. Yet the puzzlement, unease and dissatisfaction caused by seeing large economic disparities between societies have created demands for explanations—usually without creating an equal demand for years of study of the historical, geographic, and economic factors behind these disparities.

Instead, there has been a demand for simple and emotionally satisfying explanations, especially melodramatic explanations with ideological overtones, such as “exploitation” theories. “Overpopulation” is also a simple explanation that lends itself to melodrama and to solutions favored by those inclined toward controlling other people’s lives. Exploitation theories explain the wealth of some by the poverty of others, whether comparing nations or classes within nations. Sadly, however, many of the those who are said to be exploited have had very little to exploit and many of those described as “dispossessed” have never possessed very much in the first place.

Moreover, the actual behavior of those described as exploiters often shows them shunning those that they are said to exploit, in favor of dealing with more prosperous people, from whom they expect to earn more money. Thus, most American international trade and investment goes to high-income nations like those in Western Europe or the more prosperous regions of Asia, such as Japan or Singapore, with only a minute fraction of that trade or investment going to Africa or to the more poverty stricken regions of Asia or the Middle East. Conversely, the United States is itself the largest recipient of investments by foreigners… Germany—lacking colonies of any serious economic consequence for the German economy, for most of its history—became one of the most prosperous nations in Europe. Switzerland and the Scandinavian countries have had no colonies at all and yet have been among the most prosperous countries in Europe and the world…

No given factor can account for the large disparities in economic development among the countries of the world. Nor is the relative influence of any particular factor likely to remain the same over time. Although various geographic factors have played a major role in the economic opportunities available to various peoples, economic development also affects the influence of geography. The invention of railroads and trucks has made available low-cost transport for the first time in regions lacking in navigable waterways and draft animals, such as much of West Africa. Production and sales of cocoa, cotton, and tin began to flourish on a large scale in that part of the world after railroads replaced the costly use of human porters, who were very limited in the size of the loads they could carry. Even mountains became less formidable barriers after techniques of tunneling and blasting through them developed, while airplanes have flown over these mountains and shrunk the role of distance in general. Radios and telephones made long-distance communications possible for the first time in many poor and isolated areas, and the Internet has put the peoples of the whole world in instant communication with one another. In short, economic development has reduced the role of geographic factors, which had made economic development possible in the first place.