Monday, March 13, 2006

Why Some Poor Lands Stay Poor

One theory, at any rate:

Many people have an optimistic view of politicians and civil servants—that they are all serving the people and doing their best to look after the interests of the country. Other people are more cynical, suggesting that many politicians are incompetent and often trade off the public interest against their own chances of re-election. The economist Mancur Olson proposed a working assumption that government’s motivations are darker still, and from it theorized that stable dictatorships should be worse for economic growth than democracies, but better than sheer instability.

Olson supposed that governments are simply bandits, people with the biggest guns who will turn up and take everything. That’s the starting point of his analysis—a starting point you will have no trouble accepting if you spend five minutes looking around you in Cameroon. As Sam said, “There is plenty of money…but they put it in their pockets.”

Imagine a dictator with a tenure of one week—in effect, a bandit with a roving army who sweeps in, takes whatever he wishes, and leaves. Assuming he’s neither malevolent nor kindhearted, but purely self-interested, he has no incentive to leave anything, unless he plans on coming back next year. But imagine that the roaming bandit likes the climate of a certain spot and decides to settle down, building a palace and encouraging his army to avail themselves of the locals. Desperately unfair though it is, the locals are probably better off now that the dictator has decided to stay. A purely self-interested dictator will realize he cannot destroy the economy and starve the people if he plans on sticking around, because then he would exhaust all the resources and have nothing to steal the following year. So a dictator who lays claim to a land is a preferable to one who moves around constantly in search of new victims to plunder.