Book Summary: “Wealth, Poverty and Politics” by Thomas Sowell


Title: Wealth, Poverty and Politics: An International Perspective
Author: Thomas Sowell
Scope: 4 stars
Readability: 4 stars
My personal rating: 5 stars
See more on my book rating system.

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Topic of Book

Sowell examines why some individuals and groups have more income, wealth and education than others.

Key Take-aways

  • Since the invention of agriculture, vast disparities of income, wealth and skills have been the norm.
  • This is true both within and between societies.
  • There is no one cause for these differences. The inequality comes from a complicated interaction between:
    • Geography
    • Culture
    • Social factors
    • Politics

Important Quotes from Book

Shocked as we may be today by drastic contrasts between the standards of living in modern industrial nations and the standards of living in Third World countries, such disparities have been common for thousands of years of recorded history. These disparities have extended beyond wealth to the things that create wealth— including the knowledge, skills, habits and discipline that have developed unequally in different geographic, cultural and political settings.

Vast disparities in wealth, and in wealth-creating capacity, have been common for millennia… human race, the particular pattern of those inequalities has changed drastically over the centuries.

Geography is just one of the influences behind vast economic differences among peoples and places. Moreover, these differences are not simply differences in standards of living, important as such differences are. Different geographic settings also expand or restrict the development of people’s own mental potential into what economists call their human capital by presenting different peoples with access to a wider or narrower cultural universe. These geographic settings differ not only horizontally— as between Europe, Asia and Africa, for example— but also vertically, as between peoples of the plains versus peoples living up in the mountains.

Many mountain regions around the world— whether the Appalachian Mountains in the United States, the Rif Mountains of Morocco, the Pindus Mountains of Greece, the Himalayas or other mountains elsewhere— show very similar patterns of poverty and backwardness.

Isolation is a recurring factor in poverty and backwardness around the world, whether that is physical isolation or cultural isolation.

Within nations, as well as between nations, income disparities abound, whether between classes, races or other subdivisions of the human species. Reactions to these economic disparities have ranged from resignation to revolution. Because many people regard these disparities in their own country as strange, if not sinister, it is necessary to note that such disparities are not peculiar to any particular time or place. Therefore explanations of economic differences cannot be confined to factors peculiar to a particular time or place, such as modern capitalism or the industrial revolution, much less to factors that are politically convenient or emotionally satisfying.

Factors which raise morally momentous issues, such as conquest and enslavement, cannot automatically be assumed to be equally momentous as causal explanations of current economic disparities. They may be or they may not, in particular cases. Peoples or nations may be rich or poor because (1) they produced more or produced less than others or (2) they seized more of what others had produced or had what they produced seized from them.

The difference between seeing economic disparities as due to differences in the production of wealth and seeing those disparities as due to the transfer of wealth from some people to other people is fundamental.

Cultures are another factor that differs greatly among peoples and nations, as well as among individuals and groups within a given nation.

Geography:

Geography is not egalitarian.

Geographic features are not even approximately equal in different regions of the world. The disparities in geographic settings, and in the phenomena which arise from those settings, are at least as great as the income disparities that many people find so surprising.

Despite geographic influences, there can be no geographic determinism because, where peoples are in touch with other peoples, even an unchanging geographic setting interacts with changing human knowledge and differing human cultures that have different values and aspirations, producing very different outcomes at different times and places. Most of what are natural resources for us today were not natural resources for the cave man, who had not yet acquired the knowledge of how these things could be used for his own purposes.

Individual geographic influences cannot be considered in isolation, since their interactions crucially affect outcomes.

To the present day, cities have remained the sources of much, if not most, of the advancements in civilization… Peoples without the geographic prerequisites for cities have long lagged behind peoples in settings that facilitated urbanization. Cities developed relatively late in the existence of the human species— and so did most of the advances in what we today recognize as civilization. By making cities possible, agriculture made possible the great industrial, medical and other advances that flourished in urban environments.

Waterways play many vital roles— as drinking water for humans and animals, as sources of food such as fish and other aquatic creatures, as sources of irrigation for crops and as arteries of transportation for cargo and people. In all these roles, waterways differ from one another, in ways that can make them more valuable or less valuable to humans.

Looked at differently, where there has been a lack of navigable waterways, accessibility to the outside world has often been severely limited, shrinking the cultural universe drastically— and with it shrinking the opportunities of peoples to connect with other peoples and cultures far away. In some cases, a dearth of waterways and the presence of geographic barriers meant that people living only 10 or 20 miles from each other often had very little contact. This was especially so in places lacking horses, camels or other beasts of burden, during the many centuries before modern transportation and communications developed.

Even within the same continent, Western Europe’s rivers have been very different from the rivers in Eastern Europe or Southern Europe, as well as radically different from the rivers of sub-Saharan Africa. A broad coastal plain, where the land nowhere reaches 1,000 feet above sea level, means that Western Europe has had slow-flowing rivers, which were especially valuable in the long ages before power boats could readily go against the flow of swift-moving currents.

In the Western Hemisphere, the United States has had huge geographic advantages in its waterways.

Land has many aspects. The simple fact of the shape of the land determines how water will flow, and that in turn has major implications for the fate of people living in a given region. The physical and chemical composition of the soil is crucial for agriculture, as is climate. Special features of the land, such as mountains, deserts and rift valleys, can fragment a population and isolate the fragments from each other.

Certain common patterns have appeared in the lives of people living in various mountain communities around the world, whether the Appalachian Mountains in the United States, the Rif Mountains of Morocco, the Pindus Mountains of Greece, or the Himalayas in Asia. The most common of these patterns have included poverty, isolation and backwardness.

Even in the early twenty-first century, most of the mountain people in the world still practiced subsistence agriculture.

A huge swath of these unusually fertile soils spreads across the vast Eurasian landmass, beginning in Eastern Europe and extending into northeastern China.

In the Western Hemisphere, there is a large concentration of these rich soils in the American upper midwestern and plains states, extending into parts of Canada. In the temperate zone of South America there is another concentration of such soils across Uruguay and in the southern part of Argentina. But the natural processes by which such soils are generated or sustained seem not to be found in the tropics, where soil fertility is seldom comparable.

Nevertheless, many people from outside the tropics have gone to live in the tropics and prospered there, often far more so than the indigenous populations. The overseas Chinese minority in Southeast Asia and the Lebanese minority in West Africa are striking examples.

The British who settled in Australia are perhaps an even more striking example, since they became the majority population of the country, and about 40 percent of Australia is in the tropics. People of Japanese, Chinese and European ancestry are a major part of the population of tropical Hawaii, and are prospering there.

Ordinarily, it might be expected that people indigenous to a given geographic setting would be better able to make the most of that setting’s opportunities, and better able to cope with its disadvantages, than people from a very different setting. Yet the evidence seems to suggest the opposite.

During the millennia before motorized vehicles were invented, horses were crucial to everything from transportation to farming to warfare in Europe. Without horses or oxen, the evolution of the whole European economy and society would have had to be radically different. And, without such heavy-duty draft animals or heavy-duty beasts of burden as existed in Europe (or the camels, water buffalo or elephants elsewhere), the economies and societies throughout the Western Hemisphere were in fact radically different from those in Europe.

The economic and cultural repercussions reached further: Nowhere in the Western Hemisphere were there wheeled vehicles.

When the British confronted the Iroquois on the east coast of North America, the mental and material resources at the disposal of these two races were by no means confined to what they had each developed themselves. The British had been able to navigate across the Atlantic, in the first place, by using the compass invented in China, doing mathematical calculations with a numbering system from India, steering with rudders invented in China, writing on paper invented in China, using letters created by the Romans, and ultimately prevailing in combat using gunpowder, also invented in China.

A common handicap of lagging groups around the world has been isolation, whether in mountain valleys, on islands far from the nearest mainland, or living where deserts obstruct access to the rest of the world. A dearth of animals also contributes to the isolation of peoples living in the same environment, often physically not very far from each other, who nevertheless may have relatively little communication.

Another of the cultural factors fragmenting the peoples in tropical Africa is a multiplicity of languages, out of all proportion to the size of the population. Although Africans are only about 50 percent more numerous than Europeans, they have nine times as many languages as Europeans. Africans have about 90 percent as many languages as Asians, who outnumber them nearly four to one.

In Australia, as in the Western Hemisphere, the arrival of Europeans led to the transplanting of European animals— and, even more important, the transplanting of European knowledge, gathered from vastly larger geographic regions, forming a far larger cultural universe than that available to the indigenous population of Australia.

Location is a significant geographic factor, even aside from the particular characteristics of the location itself. For the ancient Greeks to be located near where agriculture developed in the Middle East gave them historic opportunities that they used to make historic intellectual contributions to Western civilization and the world.

Culture:

Geography is an influence but not predestination. Much of the influence of geography on income and wealth derives from its effects on the size of the cultural universe available to different peoples in different physical settings.

Without the cultural prerequisites for developing natural resources into real wealth, the raw physical resources themselves are of little or no value. The natural resources we use today were even more abundant in the era of the cave man, but the people of that prehistoric era were culturally not yet able to make use of most of those resources.

Third World countries were not being asked to re-create their own societies after some calamity. They were being asked to create a Western economy without the centuries of the particular cultural evolution that led up to those economies in the West.

When we try to explain differences in economic and other achievements between nations, races or civilizations, some argue that these differences are due to innate genetic differences in mental potential3 and others argue that differences are due to the environments in which people live. Both seem to assume that all the causes of differences in achievements fall into just two categories, heredity and environment. In fact, these terms are often simply defined that way, so that whatever is not hereditary is called environmental.

A vast amount of evidence from around the world suggests otherwise. There are many groups with a particular culture of their own, who take that culture with them wherever they go to live, in culturally very different kinds of societies. Germans, for example, have for centuries had both a very specific set of skills and a very specific way of life, whether they lived in Germany, Australia, Brazil, Russia or the United States. Cultures include not only customs, values and attitudes, but also skills and talents that more directly affect economic outcomes, and which economists call human capital. Among the skills in which Germans have excelled has been the building of pianos.

Many other groups besides Germans have had their own respective cultures, which they take with them into very different settings around the world. These would include the overseas Chinese in various Southeast Asian countries and in the Western Hemisphere;16 the Lebanese in West Africa, Australia, and North and South America; Jews in Europe, the Middle East, the Western Hemisphere and Australia; and the various peoples of India on every inhabited continent.

That this is a matter of culture, rather than a matter of initial wealth upon arriving in a given country, is shown by how many groups have arrived in various countries far poorer than the existing population of the host country and have nevertheless eventually risen above the economic level of those who were there before them.

The histories of the overseas Chinese in the countries of Southeast Asia—as well as in the United States— are classic examples of immigrants whose first wave arrived with little more than the clothes on their backs and a willingness to work as hard as it took for them to get ahead.

The history of outsiders’ attempts to change the culture of others has largely been a history of failure.

Not all groups, races, nations or civilizations have been equally receptive to absorbing cultural advances from others. Differences in receptivity are among the many cultural differences among groups. In some cases, however, geographic or other handicaps impeding the progress of a group or a nation have been overcome by absorbing advances made by more fortunate peoples elsewhere, and then using and improving those advances for their own economic or other benefit.

In the years following Commodore Perry’s mission, Japanese receptivity to Western culture became extraordinary, approaching adulation.

As an indication of the economic level of nineteenth century Japan, its per capita purchasing power in 1886 was one-fortieth of that in the United Kingdom, though by 1898 this had risen to one-sixth. Japan’s rise to an economic parity with the leading Western nations over the next century was achieved by a mass importation of Western technology and Western experts to begin teaching that technology in Japan, while Japanese students were sent overseas to study in Western universities. While fewer than half of Japanese children were going to school in 1886, by 1905 that had risen to 95 percent, and continued rising.

For many people in Eastern Europe, becoming educated for careers in science or in various professions meant being educated in the German language. Moreover, given the prevalence of ethnic Germans in many higher occupations in parts of Eastern Europe, entering many elite occupations there often meant acquiring the German culture in general, to fit in with elite colleagues.

From a political perspective, however, Germans in Eastern Europe were seen by many Eastern European peoples as an alien elite dominating business and the professions, and their culture was seen as a barrier to the indigenous peoples.

The situation of the Germans in Eastern Europe was by no means unique on the world stage. Much the same combination of economic advances and social resentments was created by the presence of the overseas Chinese minority in such Southeast Asian countries as Thailand, Vietnam, the Philippines, Malaysia and Indonesia. Few among the indigenous peoples of these countries sought to acquire the culture of the overseas Chinese, including their willingness to work hard for long hours— certainly not as many as resented Chinese domination in education, industry and commerce.

Much the same pattern appeared in other countries, where either a foreign minority or a different ethnic group within the same country, but with a different culture, outperformed the local majority population in educational institutions and/or in the economy. These would include, at various times and places, Armenians in the Ottoman Empire, Ibos in Nigeria, Tamils in Sri Lanka, Indians and Pakistanis in East Africa, Japanese in Peru, Indians in Fiji, Jews in Eastern Europe and Lebanese in West Africa, among others.

The political incentives in these and other countries have been to demonize whatever minority outperformed the majority population, often accusing these minorities of “taking over” whole industries, even when in fact they created industries that had not existed before.

In many times and places there have been many obstacles to cultural receptivity among lagging groups. The enthusiastic embrace of aspects of a different culture by eighteenth century Scots and nineteenth century Japanese was a rare exception. So too was the spectacular rise of Scotland and Japan to the forefront of world achievements in a remarkably short time, as history is measured.

On a smaller scale, various groups within particular non-Western countries seized upon educational opportunities presented by the presence of Western educational institutions during the era of European colonialism.

Economic progress depends upon both tangible physical factors like geography, and intangible cultural factors like human capital, including what has been aptly called “the radius of trust” within which individuals and groups cooperate in economic and social endeavors. Attitudes toward work and attitudes toward progress itself are also among the intangibles that combine with tangible factors like geographic features and physical capital to produce economic end results.

The fact that the human species achieved nothing that we today would consider to be civilization, until well within the last 10 percent of its existence, has weighty implications for our times. Even races and nations that are today considered the most backward are more advanced than any race was during most of the existence of the human species. Were all the races of the world genetically inferior for all those scores of millennia? Or was some other factor or factors holding them back?

At a minimum, this suggests that the truly isolated human being, denied even vicarious contact with the rest of his species through reading about them, is incapable of achieving even a small fraction of what his potential might be if immersed in the knowledge created by his contemporaries and heir to the knowledge of the many generations that went before him.

Back in 1836, Nathan Rothschild— one of the richest men in the world, and perhaps the richest— died from an infection that defied the efforts of leading doctors summoned to his side. Today, the poorest child of a welfare mother in America is unlikely to die from that same infection because economic and medical advances present routine cures for such things.

If you would like to learn more about why some groups are wealthier than others, read my book From Poverty to Progress.

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