Politics and Economics

Oil and Extractive Economies …

Now how about that post about extractive economies?  hmmm. Book to read:  “Why Nations Fail” Really interesting read. I observe that the common notion of “extractive economy” equates to the extraction of natural resources, mining, forestry, fishery, and so on, from the bank of resources serendipitously found in the particular piece of real-estate any nation has the good fortune to find themselves sitting upon when that resource is in demand.

And there is much to be said about that view as the “real” view, without ever touching upon the “other resource” which government and industry tend to leave out of their equations, namely the folks who work in the departments and divisions of government and corporation. Without these people nothing would get done, nothing would be manipulated or processed or assembled, or serviced or communicated, etc. etc. I believe that in fact the conditions under which the ordinary people live, labour,  and function in the society, the social framework in fact determines the success or failure of a society. I further believe that we here in North America are moving further and further towards the failure model.

Whether the output be minerals, or metals, or organic items, or services, or information manipulation, nothing is produced, no value is added, without the human input. And the ever increasing incentive is to continually make more output with less input, to become more “efficient”. In the human domain this translates into the dehumanization of the individual such that the value attached to any member of society is exactly measured by how valuable their output is to the elite. What are you good for? What kind of outputs can we “extract” from you.

In “Why Nations Fail” Daron Acemoglu and James Robinson conclusively show that it is man-made political and economic institutions that underlie economic success (or the lack of it). Korea, to take just one of their fascinating examples, is a remarkably homogeneous nation, yet the people of North Korea are among the poorest on earth while their brothers and sisters in South Korea are among the richest.

South Korea forged a society that created incentives, rewarded innovation, and allowed everyone to participate in economic opportunities. The economic success thus spurred was sustained because the government became accountable and responsive to citizens and the great mass of people. Sadly, the people of North Korea have endured decades of famine, political repression, and very different economic institutions—with no end in sight. The differences between the Koreas is due to the politics that created these completely different institutional trajectories.

The difference is not really one of Capitalism versus Communism but rather the working out of systems which value the unique talents and individual abilities of their people more or less. The more they are valued, and recognized and rewarded, the more successful the system. There is an inherent hypocrisy in our democratic system. Under the misperception that elections ensure liberty, each individual lets society put the collar on, for he sees that it is not a person, or a class of persons, but society itself which holds the end of the chain.

Our elections briefly place power in the populace, a painfully brief exercise in freedom. Inevitably this brief freedom is followed by the takeover by the politicians who alternate between ruling the majority, or pandering to them. As De Tocqueville says “The people are turned alternatively into the playthings of the sovereign and into his masters, being either greater than kings or less than men.” Democracy has not liberated the population, but enslaved them with a stealthy despotism. That stealthy despotism continues to steadily encroach on our freedoms and individual merit with every little advance of statism.

Witness the current stealth attack on the Alberta economy by the newly elected extreme left wing socialist government. We don’t even have a budget or an accounting of where we are or where we are going but the floodgates of profligacy have been opened wide to reward the voters and cronies who put them in place.  Not just in Alberta, but all over North America we are steadily creeping closer and closer to a Big Brother knows all, sees all, does all, decides all, with the concomitant reduction in the value, rights  and status of the individual. We are steadily developing a society where the individual is valued not at all. As we progress down this slippery slope we see a steady decline in productivity and 0 or negative growth regardless of what the talking heads and stooges for the central power steadily bleat.

In yet another example of how societies benefit or fail as they value their citizens is the current German experience after the fall of the wall. “Wessie” is an innocent enough name, but there is encapsulated a lot of passionate meaning  to the East German. They claim that these despicable Wessies refuse to accept reunification and lend the helping hand fellow countrymen ought to. The Wessies are ungrateful that the East Germans bought their goods and boosted their economy. Now they have become whiners, grumbling about the pathetic East Germans instead of accepting reunification and learning from their East German neighbors. So claim the East Germans.

The West German term of “Ossie” is just as stinging. The West Germans see the Ossies as afraid of accepting the freedom that they fought so hard to achieve. The Ossies cling to “ostalgie” (nostalgia) realizing suddenly that life behind the wall wasn’t so dreadful after all. The arrogant Ossies take no responsibility for the difficulties since reunification. The Ossies want a freedom that is free of accountability a “free ride” as it were. The West Germans just want them to know that freedom is something you have to continue fighting for each day. The day you stop fighting is the day you give up your freedom.

Again, I believe we are moving slowly but steadily towards the  “Ossie” model of statism and the voters are accepting it like frogs in a pot of water heating on a stove.

(continued) …





One thought on “Oil and Extractive Economies …

  1. Pingback: The Destroyers … | Not My First Rodeo

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