Basic Economics

by Sowell, Thomas

  In addition to being arteries of transportation, waterways can also supply the drinking water necessary to sustain both human and animal life, as well as the water needed to irrigate crops in arid regions. Waterways also supply food directly, in the form of fish and other marine life. In none of these roles are waterways the same in different places and times.

  Waters around the world contain very different amounts of fish and other marine life, so that fishing has long been a far more flourishing enterprise in some places than in others. Most of the Mediterranean countries, for example, have had far less productive opportunities for fishing than in the Newfoundland Banks or other places on the Atlantic coasts of North America or Europe. The continental shelf that goes far out into the Atlantic Ocean creates an environment more conducive to abundant marine life, compared to the Mediterranean Sea, where such a shelf is lacking.{878} In short, the waters of the world differ from each other, like the lands, and they differ in many different aspects, adding to the factors that make equal economic outcomes unlikely.

  Mountains

  Mountains, like waterways, have had both direct economic effects on people’s lives and, indirectly, effects on how those people themselves developed. But, unlike waterways, these direct and indirect effects of mountains have tended to be negative on those living in these mountains. As distinguished French historian Fernand Braudel pointed out: “Mountain life persistently lagged behind the plain.”{879}

  This pattern of both economic and cultural lags among people living in the mountains, compared with their contemporaries on the land below, has been as common in America’s Appalachian Mountains as in the Rif Mountains of Morocco or the Pindus Mountains of Greece. In times past, there was a similar contrast between the people living in the highlands of colonial Ceylon and people of the same race living on the land below, just as a similar contrast existed between Scottish highlanders and Scottish lowlanders.{880} Moreover, the economic and cultural contrast between Scottish highlanders and Scottish lowlanders persisted, even after both had immigrated to Australia or to the United States—the lowlanders being much more economically successful and more socially integrated in both countries.{881} Cultural differences that developed over the centuries do not vanish overnight when people move from one environment to another, or when the environment around them at a given place changes.

  In the ages before modern transportation and communication, mountain communities tended to be especially isolated, both from lowland communities and from each other. While these communities were not hermetically sealed off from the whole world, the culture of the lowlands tended to reach the highlands only very belatedly. Thus the Vlach language survived in the Pindus mountains of Greece for centuries after the people in lower elevations were speaking Greek, just as the Scottish highlanders continued to speak Gaelic after the Scottish lowlanders were speaking English. Islam became the religion of people living in the Rif Mountains of Morocco centuries after the people living below had already become Muslims.{882}

  Technological, economic and other developments likewise tended to reach the mountains long after they had spread across the lowlands, so that mountain peoples have long been known for their poverty and backwardness—whether in the Himalayas, the Appalachians or the mountains of Albania, Morocco or other places around the world.

  Villages in the Pindus mountains of Greece have had populations of fewer than a thousand people each in the past and, in more recent times, the average permanent population of these villages has usually been fewer than two hundred people. The Vlach language had still not yet completely died out in these mountains in the 1990s, though by then it was usually spoken by old people, while the younger generation was now educated in Greek and identified themselves as Greeks.{883} In these mountain villages, there were places where travel was very slow because it was limited to travel by mule or on foot, as distinguished from using wheeled vehicles, and a few villages could be reached only on foot. Many villages in the Pindus Mountains have, from time to time, been cut off from the outside world by snow or landslides.{884}

  Such severe geographic limitations have not been peculiar to the Pindus Mountains. Similar conditions have existed in other mountains around the world. But, as a geographic study of mountains put it, “In gentler environments, such as northwestern Europe or eastern North America, such tight constraints have never existed.” {885} Peoples living in isolated mountain settings have never had the same opportunities for either economic prosperity or self-development as peoples living in those “gentler environments.” Nor has resettlement of mountain peoples on the more promising land below always been a viable option, given their lack of the skills, sometimes the language, or even an understanding of a very different way of life in the lower elevations. {xxviii}

  Neither geographic isolation nor its economic and cultural handicaps have been confined to people living in mountains, however. Similar effects have been seen where isolation has been due to islands located far from the nearest mainland. When the Spaniards discovered the Canary Islands in the fifteenth century, for example, they found people of a Caucasian race living at a stone age level.{886}

  What mountains often create are cultural “islands” on land, where people in one mountain valley have had little communication with people living in other mountain valleys, perhaps not far away as the crow flies, but not very accessible across rugged mountain terrain.{887} Deserts, jungles, rift valleys and other geographic barriers can likewise create the equivalent of “islands” on land, where people are isolated from the progress of the rest of the world, and live deprived of both the economic benefits of that progress and of opportunities to develop themselves as individuals and societies by learning how things are done elsewhere.

  The poverty of many mountain peoples has often led them to put their children to work at an early age, {888} depriving them of education that could at least partially break through their physical isolation from the rest of the world. Most of the people living in various mountain communities around the Mediterranean remained illiterate on into the nineteenth and early twentieth centuries.{889} Thus lower levels of human capital have been added to the other, more direct handicaps of isolated mountain communities, such as high transportation costs and high costs per capita of building water supply systems, sewage systems, electrical systems, railroads and highways in distant and sparsely populated communities.

  Mountains play a major economic role, not only in the lives of people living in those mountains, but also in the lives of others who are affected indirectly by the presence of mountain ranges. For example, the melting of snow on mountainsides supplies rivers, streams and lakes with water, so that these waterways are not wholly dependent on rainfall. But where there are no mountain ranges, as in sub-Saharan Africa, the waterways are in fact wholly dependent on rainfall—and that rainfall is itself undependable in tropical Africa, so that rivers and streams can shrink or even dry up for months until the next rainy season comes.

  While mountains have often kept the people living in them mired in poverty and backwardness, these mountains have at the same time often brought prosperity to people living on the land below, by supplying water to otherwise arid regions. The Sierra Nevada in Spain and the Taurus Mountains in Turkey both supply the water that makes a flourishing irrigated agriculture possible in the lowlands, {890}where rainfall alone would not be sufficient. This water comes not only from melting snows on the mountainsides but also from the drainage of rain water from vast mountainous areas—trickles of water joining together as they pour down the mountainsides to become streams and the streams joining together to become rivers that can be put to use by farmers and others below.

  Animals

  Although much of the Western Hemisphere seems geographically similar to Europe, in terms of land, climate and waterways, it was a profoundly different economic setting for the indigenous peoples of North and South America before the Europeans arrived. What was totally lacking throughout the Western Hemisphere wh
en the Europeans arrived were horses, oxen or other heavy-duty beasts of burden.

  The whole economic way of life that existed in Europe for centuries would have been impossible without horses—and was impossible in the Western Hemisphere before the Europeans brought horses across the Atlantic. Severely constrained transportation options meant that the cultural universe in the Western Hemisphere was for millennia much smaller than the cultural universe available to the people living in much of Europe, Asia or North Africa. Advances made in Asia, such as gunpowder in China or so-called Arabic numerals in India, {xxix} could find their way across thousands of miles into Europe. But the indigenous peoples living on the east coast of North America had no way of even knowing of the existence of indigenous peoples living on the west coast, much less acquiring knowledge of the skills or technology developed in their different cultures.

  Large, ocean-going ships also facilitated trade in goods and knowledge between Europeans and Asians. But the loading and unloading of large cargo ships was by no means as economically feasible when there were no heavy-duty beasts of burden to carry these cargoes to or from a wide enough area on land to either supply or carry away cargoes large enough to fill a ship. Accordingly, water transport in the Western Hemisphere was in smaller vessels such as canoes, whose economically viable range and cargo capacity in the pre-Columbus era were by no means comparable to that of the ships in Europe or the even larger ships in China at that time.

  When the invaders from Europe encountered the indigenous peoples of the Western Hemisphere, it was an encounter between races with cultural universes of vastly different sizes. The Europeans were able to navigate across the Atlantic, in the first place, by drawing upon information and technologies derived over the centuries from Asia, the Middle East and North Africa. Western Europeans’ knowledge was preserved in letters created by the Romans, written on paper invented by the Chinese. They made navigational calculations at sea using a numbering system that originated in India, and were able when they landed to prevail in armed conflicts as a result of gunpowder, invented in Asia.

  When the British confronted the Iroquois or the Spaniards confronted the Incas, it was by no means a confrontation based solely on what each culture had developed within itself. The Iroquois had no way of knowing of the very existence of the Incas or the Mayans, much less drawing upon features of Inca’s or Mayan’s culture to advance their own.

  Australia likewise had no heavy-duty beasts of burden before the Europeans arrived. Nor were there farm animals like cows or goats, or herd animals like sheep or cattle. Given this vast island continent, isolated in the South Pacific, much of the land a desert and therefore sparsely populated, it can hardly be surprising that the Australian aborigines were long regarded as among the world’s most backward peoples. Rainfall patterns in the arid interior were at least as unreliable as in parts of tropical Africa. As a National Geographic Society publication put it: “Years without rain may be followed by summer deluges.”{891} These are clearly not conditions for agriculture, or even for much spontaneous growth of vegetation.

  Much of the soil in Australia is of low fertility. However, Australia has an abundance of valuable natural resources and has been the world’s largest exporter of titanium ore.{892} However, this and other mining products became natural resources only after the British arrived and applied modern science and technology. Such resources were of little or no value to the aborigines.

  The coastal fringe of Australia, where most of the country’s population lives today, had better land and climate. But, even there, it was only after the British settled in Australia, and brought Western technology, that agriculture and cattle raising were introduced to replace the hunter-gatherer societies of the aborigines. Here as elsewhere, the Europeans came armed with knowledge and technologies gathered from a vastly wider cultural universe. Geography alone was enough to keep the aborigines from having equal economic or other advances.

  Location

  Location, as such, can affect the fate of whole peoples and nations, even aside from the particular geographic characteristics of a particular location.

  Something as simple as the fact that “Russian rivers run north-south, and most traffic moves east-west”{893} means that the economic value of those rivers as transportation arteries was greatly reduced. Differences in location can also mean differences in climate that affect how much a particular waterway is subject to being frozen, and therefore unable to carry any cargo. In the south of Russia, “waterways remained open nine months of the year; in the north, only six weeks.”{894} Most of the water in Russian rivers drains into the Arctic Ocean.{895}

  Although the Volga is Russia’s most important river economically, in terms of the cargo it carries, there are two other Russian rivers which each have more than twice as much water as the Volga. But the Volga happens to be located near centers of population, industry and farmland, and the others are not. Location can matter more than the physical characteristics of a river—or of mountains or other geographic features.

  Agriculture—perhaps the most life-changing innovation in the history of the human species—came to Europe from the Middle East in ancient times, so that Europeans who happened to be located in the eastern Mediterranean, closer to the Middle East, received this epoch-making advance, moving them beyond the era of hunter-gatherers, centuries before those Europeans living in northern Europe. Agriculture greatly reduced the amount of land required to provide food to sustain a given number of people, and thus made cities possible.

  Cities were common in ancient Greece but very uncommon in northern Europe or in many other parts of the world at that time. From these ancient Greek cities came Socrates, Plato, Aristotle and others who helped lay the intellectual foundations of Western thought and civilization. {xxx} The ancient Greeks were producing philosophy, literature, geometry and architecture at a time when other Europeans tended to lag further behind the Greeks in cultural and technological development the farther away from Greece they were located. As a scholarly study of the evolution of Europe put it, in the fifth century B.C., “in the Baltic and Scandinavian regions and on the outermost fringes of the British Isles, Stone Age peoples were beginning to learn the rudiments of agriculture.” Even farther north, “hunters and herders still practiced a culture which had ended ten thousand years earlier in southern Europe.”{896}

  In a later era, people located in Western Europe received the benefits of Roman civilization that people in various other parts of Europe did not. Roman letters, for example, enabled Western European languages to develop written versions, centuries before the languages of Eastern Europe did the same. In other parts of the world as well, the happenstance of being located near an advanced civilization, such as that of ancient China, enabled some races or nations to advance far beyond other races or nations not situated near comparable sources of progress. Thus Koreans and Japanese were able to adapt Chinese writing to their own languages, becoming literate long before other Asian peoples who lived in regions remote from China. Literacy obviously opens up wider economic and other prospects denied to those who remain illiterate.

  The happenstance of being in the right place at the right time has made a huge difference in the economic fate of whole peoples. Moreover, what was the right place has varied greatly at different periods of history. After many centuries, the peoples of northern Europe would eventually surpass the peoples of southern Europe economically and technologically—as the people of Japan would likewise surpass the people of China who had for centuries been far more advanced than the Japanese. Economic inequalities between peoples or nations have been pervasive in both ancient times and modern times, though the particular patterns of those inequalities have changed drastically over the centuries.

  CULTURES

  Whether human beings are divided into countries, tribes, races or other categories, geography is just one of the reasons why they have never had either the same direct economic benefits or the same opportunities to develop their
own human capital. Cultures are another reason. Places blessed with beneficial climates, waterways and other natural advantages can nevertheless remain poverty-stricken if the culture of the people living there presents many obstacles to their developing the resources that nature has provided. What has sometimes been called “living in harmony with nature” can also be called stagnating in poverty amid potential wealth. Other peoples from other cultures often move into the same geographic setting and thrive by developing its resources.

  Cultures that promote the rule of law, rather than arbitrary powers exercised by leaders, have increasingly been recognized as major factors promoting economic development. So too are cultures where honesty is highly valued in both principle and practice. International studies of nations ranked high and low in honesty repeatedly show that the most corrupt nations are almost invariably ranked among the poorest, even when they have rich natural resources, because pervasive corruption can make it too risky to make the large investments required to develop natural resources.

  Cultural attitudes toward work also affect economic development, and these attitudes have also varied, for centuries, even within the same European civilization, where the attitudes of the elite in England during the reign of the Tudors differed considerably from the attitudes among the elites in continental European nations at that time:

  The younger son of the Tudor gentleman was not permitted to hang idle about the manor-house, a drain on the family income like the empoverished nobles of the Continent who were too proud to work. He was away making money in trade or in law.{897}