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Why Nations Fail: The Limits of Extraction

I started writing for HubPages after moving from the Midwest to the Southwest. The Southwest is exceptionally interesting, if hot and dry.

Never Say Never But Nothing Is Forever

Once again, my ideas are stoked by a book I did not find either riveting or compelling. In fact, I could not believe I was listening to it on audio, patiently waiting for it to somehow congeal. It has a wealth of information, but for what purpose? Why not commit an encyclopedia to memory? Fifteen years of research and insurmountable subject material entailing the entire globe is impossible to grasp. The book moved from country to country, place to place. "Where are we now?" I would wonder, as I returned to my iPad every so often. It was not the only book I was reading, so it was never high-priority in the virtual library wherein I reside. The book flitted effortlessly from England to Colombia to Libya to Somalia. Now it is Peru's turn. Now it is Brazil's. Ever been introduced to the clans of Somalia? What about them? I'm not really sure. For the longest time, all I could make out is that countries preside over riches, which they skillfully exploit, along with problems, which tend to either bring them down or make them meaner. Solutions are rare. Inequality is the usual companion component of extraction. Owners invent terrible forms of repression if they feel they must. Eventually, the over-arching themes appear, as I somehow knew they would. Extractions can refer to pulling teeth, but they also bundle together the universal activity upon which nations are empowered, and, on occasion, lose their way.

As to what the authors truly mean, that I will leave to better readers. I preferred to deal exclusively with the ideas they generated within my own mind. Failure, you see, is inevitable, since resources are not limitless. Nevertheless, while supplies of valuable commodities, or products, are available, the systems in which they are extracted, or manufactured, vary widely. They are basically free of charge, produced by the earth—or grown, refined, or combined—however much these processes might cost. One of the most popular methods was, and remains, to enrich a few, while forcing many to squeeze by at a subsistence level. Enter the middle class and how joyful their misery must be to Satan's minions, after, for a finite period of time, they breathe the rarefied air of the rich and famous, only to experience gut-wrenching fears of re-joining the rank and file of mere nobodies.

As they say, the rich get richer, the poor get poorer, but the middle gets bounced around like a ball or a balloon running out of air. It is the middle that is so methodically twisted and fiddled with by interest rates, employment, unemployment, endangered pensions, IRAs, inflation, and incomprehensible statistics that momentarily send Wall Street into panic, and sometimes shake Main Street to its very foundation.

Building in Tashkent, Capital of Uzbekistan

Probably not the picture you had in mind.

Probably not the picture you had in mind.

Define Nation

I only want to propose the question, What is a nation? I suppose I could look it up. For the longest time, however, I thought the author used nations and extractive institutions interchangeably. After they finally stated that nations failed owing to extractive institutions, I understood that I was both wrong and right. Nations are mostly economic machines. Or, most nations are economic machines. The best example is how the USSR came to ruin. It might seem, since it was in large part true, that Russia, and the countries in its iron grip, had tired of Communism. But basically, their economics had sunk to an indefensible low. At first, we, in the free world, were elated. Now, we are much more cautious.

To read this book is to at least find out more about how much the world has changed. In fact, if I have not totally misread it, the world has, due to its "extractive regimes", to borrow an irresistible term, grown evil. The United States has become corrupt, but it has not, to my mind, grown evil. A new world has dawned, difficult to grasp. For instance, a country such as Uzbekistan, is now more important than ever. It has multi-billion dollar companies. It has billionaires, too. Are its people, and the people in surrounding countries, literally killing one another for bigger pieces of the economic pie? According to what I have read, yes. Well, that is not the whole story. But then, what is the whole story? Because it is not contained within the covers of either this particular book nor any other. The good ole boy explanation of how things just do not happen without a few pay-offs, kick-backs, and greased palms will not suffice. What is going on globally is much fiercer than ever before.

A Free Market Economy

A Copper Mine

Not a pretty sight.

Not a pretty sight.

Consider, If You Will, the Price of a Gallon of Gasoline

Call it Obamacare or whatever, but gasoline is not as costly as it was not long ago. What happened? The price of oil fell and motorists are not gouged at the pump as in the past, from time to time. As I mentioned above, these are my own thoughts, apart from a book that suggests remedies I find good but untenable. I enjoy the "price cut" while it lasts, only the idea of more inclusive institutions, based on education, fairness, and, when and where warranted, foreign aid, is likely not to end extraction and its attendant exploitations. I suppose there is no justification for pessimism; it is just that sticky fingers tend to win out. The authors mention Chinese television as an extractive tool, but our own news stations, no matter what, keep us copacetic. The problem, as I see it, is when will earth's resources run out and civilization's extractive mechanism's come to an abrupt halt? With oil at $50 a barrel, I cannot believe otherwise than that a plan is being set behind the scenes. It cannot be blind chance. But what about copper? What about cotton? What about sneakers and textiles? Will certain items last longer than others? Will we ever really know as news stations finesse bad information?

So, Communism is dead. Dictatorships and what the authors call the "iron law of oligarchy" are still powerful As to Capitalism, I do not have a clue. Obviously, banks are not as friendly as they once where, not in terms of the housing market. Further, low-interest rates, the handicraft of the Federal Reserve, seem dedicated to wipe out savings. They advertise stimuli for business. But, as far as the naked eye can determine, most businesses do not survive, much less thrive, unless they are big enough to dictate terms. I have seen an inordinate amount of empty commercial space on my automobile travels. The same stores are everywhere. Fewer and fewer private merchants pop up. But again, this is not the book. This is my own observation, not woven into a thesis that damns extraction for selfish exclusivity. I would not take issue with the authors, except to point out that inclusivity is only partly realistic. It is also utopianism, which, by definition, also does not exist.

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Mexico City


From the first paragraph, the authors declare their primary concern with economic disparities that plague the global economy. It has always been thus, but in truth, as natural as it might seem, the world is not compelled by any force other than human nature to deprive many and sustain a few—and a great deal fewer still in the utmost lap of luxury. Occasionally, the resultant oppression is terminated, as was the case when Europe's colonies fought back, whether by negotiation or violence in the streets. Still, just as the planet's axis tilts, so does its economics, which continue to favor an elite. Years later, the former, colonial powers are still wealthier than their former colonies, who are nonetheless independent, if struggling. Thus, there is more to life, it would seem, than dollars and cents.

It took me a while to realize that the word, extraction, was somewhat malleable. It can be used, simply, to describe farming or mining, occupations based upon at least one dictionary meaning. But what the authors are getting at are how these endeavors, which might have made a great many well-to-do, become, by devious machinations, concentrated into the hands of only a few. Below, there is the case of Mexico, in which historical relics, such as buildings and glyphs, indicate the fighting that ensued over successful agricultural cultures and their various city-states. Just as it was getting good all over, primitive destructive urges took precedence. Peaceful hierarchies broke down over time and resulted in bloodshed where none was needed. Thus the idea of extraction comes to mean a method by which profits, such as they might be, in whatever form, are diverted from many to few, then cause irreversible damage to the political mainstay.

Venice Today

Viva Mexico!

I really mean this. Historians study Mexico's successive phases going beyond 3000 BC. Certainly, by all means, build a wall. Also, destroy American factories south of the border. Bring jobs home, if you can. You know what they say: this, too, shall pass. But also take a hard and fast look at how extraction, as I have come to understand it, became the ignitor of numerous wars. Think blood for oil is obscene? How about blood for maize? It preceded our age, but was tragic enough. An even more enlightening disintegration can be shown in the ill-fate of Venice over the centuries. Its commercial ventures blossomed from somewhere around 1000 AD as never before. Here, the product was trade, encompassing a wide variety of items. Lucrative arrangements were made involving the use of capital as well as adventurers, willing to travel. Then, as always, the wealthiest and more powerful employed the means to disenfranchise those working hard to clamber to heights that frightened them.

In the end, what has to be observed, is that Mexico still remains a market economy, sustaining millions of people, not all as poor, needy, and miscreant as the media might have it. At the same time, Venice has virtually turned itself into a tourist attraction. But what does all this have to do with the U.S.A.? The authors mention how the fall of the Roman Empire sent shock waves into Europe. Surely, they were not felt across the Atlantic until the end of the 15th century. It pays to remember, with historical memory, since nobody alive today was there, that Rome once ruled, century after century—not, of course, without wars, invasions, and setbacks. But when the time came, the Western Empire collapsed in a single night. The Eastern sector went on. But it also caved in in 1453, giving way to the Ottomans. If we include the Roman Republic, from 509 BC, we have an extractive political institution that endured 2000 years. Some say it still reigns in the shape and form of the Catholic Church. But that is the subject for another article.

Extraction and Downward Spiral

G8 Meeting

Buckingham Palace in the background.

Buckingham Palace in the background.

The G8

Germany, the UK, France, Italy, the U.S.A., Canada, Russia, and Japan get together every year to discuss economics. It is not easy to ascertain just exactly what the G8 does. The assumption is that representatives discuss global problems and how they can best be tackled. But are talks substantive? To me, it is a good thing they are at least talking. There are, to be blunt, terrible global problems, such as terrorism and extreme poverty. As the election process continues, it occurs to me that isolationism has once again gained in popularity, just as it did during the Great Depression, insuring it would only receive patchwork, half-solutions.

One can only wonder what a gathering of eight leaders of the most starving nations would turn out to be. In other articles, I have quoted or mentioned The End of Poverty as a landmark piece of contemporary writing. The author, Jeffrey Sachs, is connected to both an unapologetic liberal university, as well as the U.N. That's two strikes against him, I know very well, from a certain point of view. But his case is well-made, if I understand it correctly, that there is no reason poverty cannot be eradicated world-wide like an infectious disease. Cupidity is actually the obstacle.

© 2016 Carl Richardson

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