Third World Facts and Fallacies

203

their respective societies who cannot safely engage in similar low-cost ways of doing business. Whole nations likewise differ in the levels of honesty. Bicycles can be left parked without locks in Tokyo but doing so in many other countries would be a virtual guarantee that they would be stolen.

Population

For more than two centuries, one of the most persistent explanations for poverty, whether in the Third World or elsewhere, has been "overpopulation." But the term has seldom been defined in any meaningful way— that is, in any way that is not tautological. If the term is used to refer to the ratio of people to land, then even a cursory examination of data demonstrates that it is false.

Argentina has fewer people per square mile than the United States but has a per capita real income that is only a fraction of that of Americans. India has a population per square mile that is several times that of either Argentina or the United States— but not quite as many people per square mile as Japan, which has a far higher real income per capita than India. Poverty-stricken sub-Saharan Africa has a population density that is only a fraction of that of Japan.2 0 It is also possible to find some poverty-stricken countries with greater population densities than some prosperous countries. But there is no consistent relationship between population density and real income. Looking at what happens over time likewise gives no support to the theory that "overpopulation" causes poverty. As one of the leading development economists of the twentieth century put it:

Between the 1890s and 1930s the sparsely populated area of Malaysia, with hamlets and fishing villages, was transformed into a country with large cities, extensive agricultural and mining operations and extensive commerce. The population rose from about one and a half to about six million; the number of Malays increased from about one to about two and a half million. The much larger population had much higher material standards and lived longer than the small population of the 1890s. Since the 1950s rapid population increase in densely-populated Hong Kong and Singapore has been accompanied by large increases in real income and wages. The population of the Western world has more

204	Economie Facts and Fallacies

than quadrupled since the middle of the eighteenth century. Real income per head is estimated to have increased by a factor of five or more.2 1

Although advocates of the "overpopulation" theory argue that rising population threatens to create more poverty, virtually no one can provide examples of countries that had a higher standard of living when their population was half of what it is today. Various desperate expediencies have been used to try to salvage the "overpopulation" thesis, beginning in Malthus' time and continuing to today.

Some argue that it is not land, but arable land, that matters. However, changing the calculation to arable land merely adds more complication without changing the result. Nor will changing the criterion from land to natural resources in general yield much different results. As already noted, the value of natural resources per capita in Uruguay and Venezuela is some multiple of their value in Switzerland or Japan, while the real income per capita in Switzerland or Japan is some multiple of what it is in Uruguay or Venezuela. Some argue that population should not be compared to raw natural resources but to developed resources, in order to determine whether there is overpopulation. However, developed resources are simply another name for wealth, so it is simply a tautology to say that more population relative to developed resources means lower wealth per capita. The real danger in tautologies is that, because they are irrefutable definitions, the irrefutability of what they are saying about the real world— which is nothing— gives a spurious credibility to what they insinuate.

As noted in Chapter 2, thinly populated areas mean much higher costs per person to supply water, electricity, sewage lines, telephone lines, hospitals, and numerous other cosdy things. Sub-Saharan Africa's thin population per square mile is one of its many major economic handicaps.

Whatever the intellectual deficiencies of the overpopulation explanation of poverty, it has been politically viable for centuries and Third World governments have imposed birth control policies, with the most draconian being those in China, where there have been severe penalties for exceeding the number of children prescribed by government authorities, usually one child per couple.

Third World Facts and Fallacies

205

Culture

While external factors like property rights and geographical factors can influence the economic development of nations, such internal factors as cultural values can often be of equal or even greater importance. It has not been at all uncommon for people from outside a given culture to come into a society and, beginning at an economic level below that of the existing population, rise over time well above those around them, despite the fact that all of the people in the society live within the same external conditions. Italian immigrants to Argentina, Lebanese immigrants to West Africa, immigrants from India to Fiji, Jewish immigrants to the United States, German immigrants to czarist Russia, and Chinese immigrants to a number of countries in Southeast Asia are just some of the examples of this phenomenon. Many, if not most, of these immigrants arrived destitute financially and often with little or no education.2 2 What they had was a culture that was different from that of those whom they overtook and left behind.

Whole industries and sectors of an economy have been created by people from different cultures. Argentina became one of the world s great exporters of wheat after German immigrants settled there, even though the Argentines had imported wheat before. The land and its ability to grow wheat had not changed. What had changed were the people who setded on the land. Sometimes new industries were introduced not by immigrants but by sojourners from other countries, as the British built railroads in countries around the world, from India to Africa to Australia and Argentina.

Worldwide migrations in recent centuries have led to racially and culturally different peoples interacting in societies far from those in which their forebears originated and developed their different cultures and different economic skills. Often they reproduced in their new destinations the same patterns found in their lands of origin. The mining that was so much a part of the economic history of Wales was also a major part of the history of Welsh immigrants to the United States and Australia. The prominence or predominance of Jews in clothing production in medieval

206	Economie Facts and Fallacies
Spain	also reappeared later in the Ottoman Empire, in the United States

and in South America.

Areas blessed with an abundance of natural resources have been unable to sustain prosperity, even after it has been achieved, when the surrounding institutions and culture do not sustain a dependable framework of law and order. Argentina has been a classic example, though similar patterns have appeared in some other Latin American countries.

Argentina has been described as "among the world's most richly endowed countries," with "some of the world's richest soil" and "substantial oil and natural gas deposits.2 3 Early in the twentieth century, it was one of the ten richest nations in the world. Much of its modern development, however, was not internally generated but was due to foreign, mostly British, initiative. The rise of nationalistic and ideological politics, especially under the charismatic leadership of dictator Juan Peron, led to a decline of foreign investment in Argentina from a high of 48 percent of all investment in 1913 to just 5 percent by the 1950s.2 4

Counterproductive domestic political and economic policies marked Argentina's fall from the ranks of the most prosperous nations. As one study put it: "The countries with which Argentina was grouped in terms of economic progress early in this [twentieth] century have attained per-capita GNPs generally four or five times Argentina's, and virtually all of them are viable democracies."2 5 By the end of the twentieth century, Argentina's economy and monetary system had collapsed, leading to widespread use of barter. Despite some recovery from that low point, Argentina's gross domestic product per capita in the early twenty-first century was one-tenth that of the United States.2 6

Since the countries which have achieved the kind of prosperity common in Western Europe, North America or Japan remain a minority among the nations of the world, it is the coming together of numerous factors favorable to economic development which requires explanation, rather than the fact that the majority of nations have not been equally fortunate. The fact that most of these prosperous nations took centuries for all these factors to come together underscores the rarity of these achievements. Transplanted European societies such as the United States, Canada, and Australia began

Third World Facts and Fallacies

207

their lives in new lands with a legacy of already developed cultures favorable to economic development, rather than having to spend centuries developing such cultures on their own. The fact that earlier leaders in economic and other development, such as China and the Ottoman Empire, lost their leadership and fell far behind the new leaders likewise indicates what a combination of favorable circumstances is required— and how economic prosperity can be lost if vital parts of that combination are lost.

Resistance to the idea of internal reasons for differences among individuals, groups, or nations has been as widespread and desperate as it has been fallacious. One academic, for example, said that Jews were fortunate to arrive in America just as the garment industry was about to take off27— ignoring the possibility that it was precisely the arrival of Jews that led to an upsurge in the garment industry, as their arrival in other countries had done.

This widespread refusal to countenance the very possibility that factors internal to particular peoples have had an influence on their economic condition has been expressed in claims that such beliefs are just "stereotypes" which are "blaming the victim" in the case of poorer individuals or nations. So strongly have such views been held that those who have them have not hesitated to dismiss first-hand observations in favor of general presumptions by others like themselves, even when they have neither seen nor studied the people concerned. Such views have affected not only how the past has been seen but also what policies have been advocated for the future— especially the advocacy of foreign aid programs for Third World countries. Because foreign aid in the form of the Marshall Plan was so successful in Western Europe after the Second World War, many have argued that it would have similar benefits in the Third World.

The failure of massive amounts of foreign aid to create any comparable economic development in most of the Third World has not dimmed the luster of foreign aid in the eyes of those who refuse to re-examine the assumptions on which it was based. Yet there is nothing mysterious in those failures when the different cultures are taken into account. Postwar Western Europe had suffered devastations as a result of the war but what had not been destroyed was the knowledge and culture which had in the past industrialized Europe and led the world into the industrial age. Foreign aid