Sowell_Thomas_-_Basic_Economics_-_5th_Edition_2014

of these factors are exponentially greater than the number of factors considered in isolation, leading to great variations in economic outcomes in places that may seem to be similar, when the interaction of factors is not taken into account. This applies not only to variations in the land but also to variations in waterways, and not only to effects in agriculture but also to effects on cities, industries and commerce. None of the valuable natural resources in the land—whether iron ore, coal, petroleum or many others—is spread evenly over the planet. Not only do particular natural resources tend to be concentrated in particular places, such as oil in the Middle East, the knowledge of how to extract and process such resources develops in different eras, so that a particular material thing becomes a valuable resource in different countries and at different periods of history. While there have been large petroleum deposits in the Middle East for thousands of years, petroleum became a valuable resource only after science and technology developed to the point that made it indispensable to the industrial nations of the world, and thus brought large amounts of wealth from these nations to the Middle East to pay for its oil. In addition to natural resources such as land and the minerals in it, which can contribute directly to economic prosperity and development, there are other geographic factors which contribute indirectly but importantly, by facilitating various economic activities. Among these are navigable waterways and animals that facilitate both travel and agriculture.Navigable Waterways There are economic reasons why most cities around the world are located on waterways, whether rivers, harbors or lakes. Some of the most famous cities are located at or near the terminus of great rivers that empty into the open seas (New York, London, Shanghai, Rotterdam), some are located beside huge lakes or inland seas (Geneva, Chicago, Odessa, Detroit) and some are located on great harbors

emptying into the open seas (Sydney, San Francisco, Tokyo, Rio de Janeiro). Among the economic reasons for these locations are transportation costs.Land transport has cost far more than water transport, especially in the millenniabefore self-propelled vehicles appeared, less than two centuries ago. Even today,it can cost more to ship cargo a hundred miles by land than to ship it a thousandmiles by water. In 1830, a cargo that cost more than thirty dollars to ship 300 milesover land could be shipped 3,000 miles across the Atlantic Ocean for just tendollars.{863} Given the vast amounts of things that have to be constantlytransported into cities, such as food and fuel, and the huge volume of a city’soutput that must be transported out to sell elsewhere, it is not surprising that somany cities are located on navigable waterways. The benefits of navigable waterways are by no means evenly distributedaround the world, whether in terms of the number of rivers and harbors or thesuitability of those rivers and harbors for transporting cargoes. The navigability ofrivers is limited by the shape of the lands through which they flow. WesternEurope, for example, is criss-crossed with rivers flowing gently across wide andlevel coastal plains into the open seas, which provide access to countries aroundthe world. By contrast, most of sub-Saharan Africa, except for narrow coastalplains, is more than 1,000 feet in elevation and much of it is more than 2,000 feethigh. Africa’s narrow coastal plains are often backed by steep escarpments thatblock the penetration of the interior by vessels coming in from the sea, andprevent boats from the interior from reaching the coast. Because of the physical shape of the land, rivers in sub-Saharan Africa plungefrom a height of a thousand feet or more, down through cascades and waterfallson their way to the sea. The huge Zaire River, for example, begins 4,700 feet abovesea level, {864}and so must fall nearly a mile before it finally flows out into theAtlantic. Such rivers are navigable only for limited level stretches, usuallynavigable for boats of only limited sizes, and often for only limited times of theyear, given the more sporadic rainfall patterns in sub-Saharan Africa, compared tothe more even rainfall patterns in Western Europe. During the dry season, even a

major African river like the Niger, draining water from an area larger than Texas, isat some point less than three feet deep.{865} Yet, during the height of the rainyseason, the Niger has been characterized as “a 20-mile-wide moving lake.”{866} Although the Zaire River empties more water into the sea than does theMississippi, the Yangtze, the Rhine or many other great commercial waterways ofthe world, the thousands of feet that the Zaire must come down on its way to thesea, through rapids, cascades and waterfalls, preclude any comparable volume ofcargo traffic. Ships coming in from the Atlantic on the Zaire River cannot get veryfar inland before they are stopped by a series of cataracts.{867} Neither the length ofa river nor even its volume of water says anything about its economic value as anartery of transportation. Like other African rivers, the Zaire provides many miles of localtransportation, but these are not necessarily long continuous miles that wouldconnect the interior of Africa by water with the open seas and international trade.The extent to which African rivers connect different communities within thecontinent with each other is also limited by the many cascades and waterfallswhich determine how far a given vessel can go. Sometimes canoes may be emptied of their cargoes and carried around acascade or waterfall, to be reloaded for the next portion of the journey. But thisnot only limits the size of the vessels used, and therefore the size of the cargoes,but also increases the cost of the additional time and labor required to get a cargoto its destination. The net result is that only cargoes with a very high value in asmall physical size are economically viable to transport. By contrast, in parts of theworld where rivers flow continuously for hundreds of miles through level plains,large cargoes of relatively low value in proportion to their bulk and weight—suchas wood, wheat or coal—are economically viable to ship. Harbors are likewise neither as common nor as useful in some parts of theworld as in others. Although Africa is more than twice the size of Europe, theAfrican coastline is shorter than the European coastline. This is possible onlybecause the European coastline twists and turns far more, creating many more

harbors where ships can dock, sheltered from the rough waters of the open seas. Moreover, the deep waters in many European harbors mean that large,ocean-going ships can often dock right up against the land, as in Stockholm orMonaco, whereas the shallow coastal waters in much of sub-Saharan Africa meanthat large ships have had to anchor offshore, and unload their cargoes ontosmaller vessels that can travel in these shallow waters—a far more expensiveprocess, and one that has often been prohibitively expensive. For centuries, tradebetween Europe and Asia took place in ships that sailed around Africa, usuallywithout stopping. Even within Europe, the rivers and harbors of Eastern Europe are not thesame as the rivers and harbors of Western Europe. Because Western Europe iswarmed by the Gulf Stream flowing through the Atlantic Ocean, Western Europe’srivers and harbors are not frozen as often or as long in winter as the rivers andharbors of Eastern Europe. But, even when the rivers in both parts of Europe areflowing, those in Western Europe are more often flowing into the open seas,providing ships with access to every continent in the world, while many rivers inEastern Europe flow into lakes or inland seas, or into the Arctic Ocean, which ismore distant from the rest of the world, even when the Arctic Ocean is notencumbered by ice. In Western Europe the Rhine, for example, flows northward from Switzerlandthrough Germany, France and Holland, and out into the North Sea, which is part ofthe same vast, continuous expanse of water as the Atlantic Ocean. But the Danubeflows generally southeastward through Eastern Europe into the Black Sea, aninland sea far distant from the Atlantic Ocean, which can be reached only bysailing westward across the entire length of the Mediterranean Sea before finallygetting out into the Atlantic to gain access to the rest of the world. Economically,the rivers of Eastern Europe and Western Europe are obviously not equivalent forpurposes of overseas trade, however valuable the Danube may be for tradeamong those parts of Europe that it flows through. Nor are the rivers that flow from Southern Europe into the Mediterranean the

economic equivalent of rivers to the north. As a distinguished geographer put it:“The rivers which flowed north of the Alps were incomparably more useful thanthose of the Mediterranean basin. Their flow was more regular; they were deeper,and low water and ice rarely interrupted navigation for more than shortperiods.”{868} He also said of Europe’s waterways: Only in southern Europe was river navigation of little or no importance. There were exceptions, like the Po and Guadalquivir, but most Mediterranean rivers were torrents in winter and almost dry in summer.{869} When one considers the depths of rivers, there are still more inequalities thatare economically relevant. Although the Nile is the longest river in the world, itsdepth was not great enough for the largest ships in the days of the Roman Empire,{870} much less for the aircraft carriers and other giant ships of today. Yet an aircraftcarrier can sail up the Hudson River and dock right up against the land in midtownManhattan. Some of the rivers in Angola are navigable only by boats requiring nomore than 8 feet of water.{871} During the dry season, even a major West Africanriver like the Niger will carry barges weighing no more than 12 tons.{872} Bycontrast, ships weighing 10,000 tons have been able to go hundreds of miles upthe Yangtze River in China, and smaller vessels another thousand miles beyondthat.{873} China has had an “immense network—unique in the world—of navigablewaterways formed by the Yangtze and its tributaries,” as well as an “indentedcoastline,” full of harbors.{874} These navigable waterways contributed to China’sdevelopment as a nation, including during many centuries when it was theworld’s most advanced nation. Rivers in Japan, however, have smaller and steeper drainage areas, makingthese rivers less navigable, because their waters are flowing more steeply down tothe sea.{875} Japan was for centuries a poor and underdeveloped country before itbegan, in the second half of the nineteenth century, to import modern technologyfrom countries more favorably situated geographically in Europe or from the

United States. As of 1886, the per capita purchasing power in Japan was one-fortieth of that in the United Kingdom, though by 1898 this had risen to one-sixth. {876} Only in the twentieth century did Japan rise to the level of being one of themost technologically advanced and economically prosperous nations in the world. Japan lacked the geographical advantages—such as natural resources andnetworks of navigable rivers flowing over vast level plains—that enabled firstChina, and later Western Europe, to become the most technologically andeconomically advanced region of the world in their respective eras. Without thesegeographic advantages, Japan had little opportunity to pioneer the kind of epoch-making technological advances that marked early Chinese, and later WesternEuropean, civilizations. But the ability of the Japanese to incorporate the industrialrevolution that had originated elsewhere, master its requirements and thenexploit its opportunities, enabled Japan to become the technological equal ofWestern nations and to surpass a China that had, over the centuries, eventuallylost its technological lead and dynamism. Given the dependence of cities on waterways, it can hardly be surprising thatWestern Europe became one of the most urbanized regions of the world, and sub-Saharan Africa remained one of the least urbanized. In the Middle Ages, China hadlarger cities than any in Europe. What urbanization means in terms of people, andthe range of their knowledge, skills and experience—their human capital—is thatfirst the Chinese, and later Western Europeans, had opportunities to developurban industrial, commercial and financial skills and orientations far more often,and far longer, than the peoples of the Balkans or of sub-Saharan Africa. Forcenturies, in countries around the world, achievements and advances in manyfields of endeavor have been far greater in cities than among a similar number ofpeople scattered in the hinterlands.{877} To the direct economic benefits created by low transport costs on navigablewaterways must be added the value of greater human capital resulting fromexposure to a wider cultural universe that includes the products, technology andideas of countries around the world. The economic benefits of this exposure to a

wider cultural universe may well equal or exceed that of the direct economic benefits of international trade. 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 thesame race living on the land below, just as a similar contrast existed betweenScottish highlanders and Scottish lowlanders.{880} Moreover, the economic andcultural contrast between Scottish highlanders and Scottish lowlanders persisted,even after both had immigrated to Australia or to the United States—thelowlanders being much more economically successful and more sociallyintegrated in both countries.{881} Cultural differences that developed over thecenturies do not vanish overnight when people move from one environment toanother, or when the environment around them at a given place changes. In the ages before modern transportation and communication, mountaincommunities tended to be especially isolated, both from lowland communitiesand from each other. While these communities were not hermetically sealed offfrom the whole world, the culture of the lowlands tended to reach the highlandsonly very belatedly. Thus the Vlach language survived in the Pindus mountains ofGreece for centuries after the people in lower elevations were speaking Greek, justas the Scottish highlanders continued to speak Gaelic after the Scottish lowlanderswere speaking English. Islam became the religion of people living in the RifMountains of Morocco centuries after the people living below had alreadybecome Muslims.{882} Technological, economic and other developments likewise tended to reachthe mountains long after they had spread across the lowlands, so that mountainpeoples have long been known for their poverty and backwardness—whether inthe Himalayas, the Appalachians or the mountains of Albania, Morocco or otherplaces around the world. Villages in the Pindus mountains of Greece have had populations of fewerthan a thousand people each in the past and, in more recent times, the averagepermanent population of these villages has usually been fewer than two hundredpeople. The Vlach language had still not yet completely died out in thesemountains 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 wheretravel was very slow because it was limited to travel by mule or on foot, asdistinguished from using wheeled vehicles, and a few villages could be reachedonly on foot. Many villages in the Pindus Mountains have, from time to time, beencut off from the outside world by snow or landslides.{884} Such severe geographic limitations have not been peculiar to the PindusMountains. Similar conditions have existed in other mountains around the world.But, as a geographic study of mountains put it, “In gentler environments, such asnorthwestern Europe or eastern North America, such tight constraints have neverexisted.” {885} Peoples living in isolated mountain settings have never had the sameopportunities for either economic prosperity or self-development as peoplesliving in those “gentler environments.” Nor has resettlement of mountain peopleson the more promising land below always been a viable option, given their lack ofthe skills, sometimes the language, or even an understanding of a very differentway of life in the lower elevations. {xxviii} Neither geographic isolation nor its economic and cultural handicaps havebeen confined to people living in mountains, however. Similar effects have beenseen where isolation has been due to islands located far from the nearestmainland. When the Spaniards discovered the Canary Islands in the fifteenthcentury, for example, they found people of a Caucasian race living at a stone agelevel.{886} What mountains often create are cultural “islands” on land, where people inone mountain valley have had little communication with people living in othermountain valleys, perhaps not far away as the crow flies, but not very accessibleacross rugged mountain terrain.{887} Deserts, jungles, rift valleys and othergeographic barriers can likewise create the equivalent of “islands” on land, wherepeople are isolated from the progress of the rest of the world, and live deprived ofboth the economic benefits of that progress and of opportunities to developthemselves as individuals and societies by learning how things are doneelsewhere.

The poverty of many mountain peoples has often led them to put theirchildren to work at an early age, {888} depriving them of education that could atleast partially break through their physical isolation from the rest of the world.Most of the people living in various mountain communities around theMediterranean remained illiterate on into the nineteenth and early twentiethcenturies.{889} Thus lower levels of human capital have been added to the other,more direct handicaps of isolated mountain communities, such as hightransportation costs and high costs per capita of building water supply systems,sewage systems, electrical systems, railroads and highways in distant and sparselypopulated communities. Mountains play a major economic role, not only in the lives of people livingin those mountains, but also in the lives of others who are affected indirectly bythe presence of mountain ranges. For example, the melting of snow onmountainsides supplies rivers, streams and lakes with water, so that thesewaterways are not wholly dependent on rainfall. But where there are no mountainranges, as in sub-Saharan Africa, the waterways are in fact wholly dependent onrainfall—and that rainfall is itself undependable in tropical Africa, so that riversand streams can shrink or even dry up for months until the next rainy seasoncomes. While mountains have often kept the people living in them mired in povertyand backwardness, these mountains have at the same time often broughtprosperity to people living on the land below, by supplying water to otherwisearid regions. The Sierra Nevada in Spain and the Taurus Mountains in Turkey bothsupply the water that makes a flourishing irrigated agriculture possible in thelowlands, {890}where rainfall alone would not be sufficient. This water comes notonly from melting snows on the mountainsides but also from the drainage of rainwater from vast mountainous areas—trickles of water joining together as theypour down the mountainsides to become streams and the streams joiningtogether 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 when 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 thecenturies from Asia, the Middle East and North Africa. Western Europeans’knowledge was preserved in letters created by the Romans, written on paperinvented by the Chinese. They made navigational calculations at sea using anumbering system that originated in India, and were able when they landed toprevail in armed conflicts as a result of gunpowder, invented in Asia. When the British confronted the Iroquois or the Spaniards confronted theIncas, it was by no means a confrontation based solely on what each culture haddeveloped within itself. The Iroquois had no way of knowing of the very existenceof the Incas or the Mayans, much less drawing upon features of Inca’s or Mayan’sculture to advance their own. Australia likewise had no heavy-duty beasts of burden before the Europeansarrived. Nor were there farm animals like cows or goats, or herd animals like sheepor cattle. Given this vast island continent, isolated in the South Pacific, much of theland a desert and therefore sparsely populated, it can hardly be surprising that theAustralian aborigines were long regarded as among the world’s most backwardpeoples. Rainfall patterns in the arid interior were at least as unreliable as in partsof tropical Africa. As a National Geographic Society publication put it: “Yearswithout rain may be followed by summer deluges.”{891} These are clearly notconditions for agriculture, or even for much spontaneous growth of vegetation. Much of the soil in Australia is of low fertility. However, Australia has anabundance of valuable natural resources and has been the world’s largestexporter of titanium ore.{892} However, this and other mining products becamenatural resources only after the British arrived and applied modern science andtechnology. Such resources were of little or no value to the aborigines. The coastal fringe of Australia, where most of the country’s population livestoday, had better land and climate. But, even there, it was only after the Britishsettled in Australia, and brought Western technology, that agriculture and cattleraising 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 intellectualfoundations of Western thought and civilization. {xxx} The ancient Greeks wereproducing philosophy, literature, geometry and architecture at a time when otherEuropeans tended to lag further behind the Greeks in cultural and technologicaldevelopment the farther away from Greece they were located. As a scholarly studyof the evolution of Europe put it, in the fifth century B.C., “in the Baltic andScandinavian regions and on the outermost fringes of the British Isles, Stone Agepeoples were beginning to learn the rudiments of agriculture.” Even farther north,“hunters and herders still practiced a culture which had ended ten thousand yearsearlier in southern Europe.”{896} In a later era, people located in Western Europe received the benefits ofRoman civilization that people in various other parts of Europe did not. Romanletters, for example, enabled Western European languages to develop writtenversions, centuries before the languages of Eastern Europe did the same. In otherparts of the world as well, the happenstance of being located near an advancedcivilization, such as that of ancient China, enabled some races or nations toadvance far beyond other races or nations not situated near comparable sourcesof progress. Thus Koreans and Japanese were able to adapt Chinese writing totheir own languages, becoming literate long before other Asian peoples who livedin regions remote from China. Literacy obviously opens up wider economic andother prospects denied to those who remain illiterate. The happenstance of being in the right place at the right time has made ahuge difference in the economic fate of whole peoples. Moreover, what was theright place has varied greatly at different periods of history. After many centuries,the peoples of northern Europe would eventually surpass the peoples of southernEurope economically and technologically—as the people of Japan would likewisesurpass the people of China who had for centuries been far more advanced thanthe Japanese. Economic inequalities between peoples or nations have beenpervasive in both ancient times and modern times, though the particular patternsof those inequalities have changed drastically over the centuries.

CULTURES Whether human beings are divided into countries, tribes, races or othercategories, geography is just one of the reasons why they have never had eitherthe same direct economic benefits or the same opportunities to develop their ownhuman capital. Cultures are another reason. Places blessed with beneficialclimates, waterways and other natural advantages can nevertheless remainpoverty-stricken if the culture of the people living there presents many obstaclesto their developing the resources that nature has provided. What has sometimesbeen called “living in harmony with nature” can also be called stagnating inpoverty amid potential wealth. Other peoples from other cultures often move intothe same geographic setting and thrive by developing its resources. Cultures that promote the rule of law, rather than arbitrary powers exercisedby leaders, have increasingly been recognized as major factors promotingeconomic development. So too are cultures where honesty is highly valued inboth principle and practice. International studies of nations ranked high and lowin honesty repeatedly show that the most corrupt nations are almost invariablyranked among the poorest, even when they have rich natural resources, becausepervasive corruption can make it too risky to make the large investments requiredto develop natural resources. Cultural attitudes toward work also affect economic development, and theseattitudes have also varied, for centuries, even within the same Europeancivilization, where the attitudes of the elite in England during the reign of theTudors differed considerably from the attitudes among the elites in continentalEuropean 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} Sometimes economic progress depends on whether people in a particularculture are seeking progress, rather than being contented with doing things theway things have always been done. The proportions of the population who seekprogress and the proportions who are satisfied with doing things in familiar wayscan differ between societies and within societies, thereby affecting economicdifferences among regions and nations. In the United States, for example, theantebellum South tended not to advance as fast as other parts of the country: Techniques of Southern agriculture changed slowly, or not at all. So elementary a machine as the plow was adopted only gradually and only in scattered places; as late as 1856, many small farmers in South Carolina were still using the crude colonial hoe. There was little change in the cotton gin, gin house, or baling screw between 1820 and the Civil War.{898} The cotton gin, a crucial economic factor in the antebellum South, wasinvented by a Northerner. When it came to inventions, only 8 percent of the U.S.patents issued in 1851 went to residents of the Southern states, whose whitepopulation was approximately one-third of the white population of the country.Even in agriculture, the main economic activity of the region, only 9 out of 62patents for agricultural implements went to Southerners.{899} Differences in habitsand attitudes are differences in human capital, which can mean differences ineconomic outcomes. As of the Civil War era, the North produced 14 times as muchtextiles as the South, despite the South’s virtual monopoly of growing cotton, andthe North also produced 15 times as much iron as the South, 25 times themerchant ship tonnage and 32 times as many firearms.{900} The advantages of a larger cultural universe do not end with the particularproducts, technologies or ideas that come from other cultures. Repeatedly seeinghow things are done differently in other societies, with better results in particular

cases, not only brings those particular foreign products, technologies and ideas, but also counters the normal human tendency toward inertia that keeps individuals and societies doing things in the same old familiar ways. In other words, a particular culture may develop its own original new ways of doing things, as a result of seeing repeatedly how others have done other things differently. Conversely, a society isolated from the outside world has fewer spurs toward rethinking their own traditional ways.Human Capital Physical wealth may be highly visible, but human capital, invisible inside people’s heads, is often more crucial to the long-run prosperity of a nation or a people. John Stuart Mill used this fact to explain why nations often recover, with surprising speed, from the physical devastations of war: “What the enemy have destroyed, would have been destroyed in a little time by the inhabitants themselves” in the normal course of their consumption, and would require replenishing. Given the wear and tear on capital equipment, constant reproduction of new equipment would likewise be required.{901} What the war does not destroy is the human capital that created the physical capital in the first place. Even the massive physical devastations of World War II, from bombings and widely destructive ground battles, were followed by a rapid economic recovery in postwar Western Europe. Aid from the United States under the Marshall Plan has often been credited with this recovery, but the later sending of foreign aid to many Third World countries produced no such dramatic economic growth. The difference is that industrialized Western Europe had already developed the human capital which had produced modern industrial societies there before the war began, but Third World countries had yet to develop that human capital, without which the physical capital was often of little or no use when it was donated as foreign aid. The Marshall Plan eased the transition to peacetime

economic recovery in Western Europe, but foreign aid could not create thenecessary scale of human capital where that human capital did not already exist. Confiscations of physical capital have likewise seldom produced any major orlasting enrichment of those who do the confiscating—whether these are ThirdWorld governments confiscating (“nationalizing”) foreign investments or urbanrioters looting stores in their neighborhoods. What they cannot confiscate is thehuman capital that created the physical things that are taken. However serious thelosses suffered by those who have been robbed, whether by governments or bymobs, the physical things have a limited duration. Without the human capitalrequired to create their replacements, the robbers are unlikely to prosper in futureyears as well as those who were robbed. Human capital may also play a role in the fact that has often been pointedout, that many of the poorest societies have been located in the tropics, and manyof the most prosperous have been located in temperate zones. Yet many peoplesfrom temperate zones who have gone to live in the tropics have often prosperedthere, as the Chinese have in Malaysia and the Lebanese have in West Africa, farmore so than people indigenous to those regions. Here, as elsewhere, the effectsof a particular geographic setting can be both direct and indirect—presentingobjective opportunities and either extending or restricting the development ofthe human capital necessary to make the most of those opportunities. Sometimes the very advantages of a given geographic setting can make itunnecessary for the people indigenous in that setting to have to develop theirhuman capital to the fullest. For example, a tropical land capable of producingcrops the year round can make it unnecessary for the people there to develop thesame sense of urgency about time, and the resulting habits of economic self-discipline, that are necessary for sheer physical survival in a climate where peoplemust begin plowing the land soon after it thaws in the spring, if they are to raise acrop during the limited growing season in the temperate zone that will enablethem to feed themselves throughout the long winter months. This was especiallyso during the millennia before modern transportation made it economically

feasible to draw vast amounts of food from other lands around the world. The unavoidable necessity of storing food to live on during the winter meansthat, for centuries, ingrained habits of saving were also essential for survivalamong peoples in the temperate zones. But, in the tropics, the development ofsuch habits is by no means always so urgent. Moreover, the ability to store grain orpotatoes to eat during the winter is much greater in temperate climates than theability to store bananas, pineapples or other tropical foods in hot climates. {xxxi}Human capital includes not only information but habits, and the habits necessaryfor survival in some geographic settings are by no means the same as in othergeographic settings. Like many other things, natural abundance can have both positive andnegative effects. The saying among the Thais, “Rice on the land and fish in thewater”{902} expressed a confidence in the abundance of nature that was foreign topeople struggling to survive in the very different geographic setting of southernChina, where hunger and starvation were perils for centuries, forcing the peoplethere to become frugal, hard-working and resourceful, under threat of extinction.When people from southern China migrated into more promising geographicenvironments in Thailand, Malaysia or the United States, these qualities—thesehabits, this human capital—enabled them to thrive, even when they began asdestitute immigrants and later became more prosperous than the people whowere living in the same environment before them. Much the same story could be told of the Lebanese, the Jews and others whoarrived in many places around the world as immigrants with very little money, butwith much human capital that they had developed in other, more challengingsettings. Many other groups have had similar patterns as migrants within theirown countries: Conspicuous among advanced groups are some whose home region is infertile and overpopulated. The Tamils of Sri Lanka, the Bamiléké of Cameroon, the Kabyle Berbers of Algeria, the Kikuyu of Kenya, the Toba Batak of Indonesia, the Ilocano of the Philippines, the Malayalees of Kerala in India, and the Ibo of Nigeria all come from

regions too poor to support their populations, and all have unusually high rates of migration to areas outside their home regions, where they have taken up a variety of opportunities in the modern sector.{903} The era of European colonialism put Western education and Western industrial, commercial and administrative skills within reach for groups previously among the poorer indigenous people such as the Ibos in Nigeria and the Tamils in Sri Lanka, who then rose to become more prosperous than others who had been more prosperous before. The resentments of their rise, and the politicized polarizations that followed, led to bloody civil wars in both countries.Cultural Isolation One of the aspects of a culture that can be very important in its economic consequences is a willingness, or unwillingness, to learn from other cultures. This can vary greatly from one culture to another. Both Britain and Japan, for example, rose from being island nations lagging economically for centuries behind their respective continental neighbors, before eventually catching up and then surging ahead of them, largely as a result of absorbing the cultural and economic advances of other nations and then carrying these advances further themselves. The otherwise very different cultures of Britain and Japan were alike in their receptivity to incorporating features of other cultures into their own. This receptivity to advances made elsewhere is at least part of the answer to a question about Britain posed by an Italian scholar: “How, in the first place, did a peripheral island rise from primitive squalor to world domination?”{904} By way of contrast, the Arab Middle East—once a culture more advanced than that in Europe—became resistant to learning from others, lost its lead, and then fell behind other nations that were advancing faster. In today’s Arab world— about 300 million people in 22 countries{905}—the number of books translated from other languages has been just one-fifth of the number translated by Greece alone, for a population of 11 million. A United Nations study showed that the

number of books translated in the Arab world during a five-year period was lessthan one book for every million Arabs, while in Hungary there were 519 bookstranslated for every million people, and in Spain 920 books per million people.{906} Put differently, Spain translates as many books into Spanish annually as theArabs have translated into Arabic in a thousand years.{907} Cultural isolation canbe a factor in wealth differences among nations, just as geographic isolation canbe.{xxxii} While highly educated people in the Arab world may not requiretranslations to be able to understand what is written in other languages, the sameis not true for the less fortunate masses of people. Sometimes cultural isolation has been the result of a government decision,as in fifteenth-century China, when that country was far more advanced thanmany other nations. China’s rulers deliberately chose to isolate China from whatthey saw as foreign barbarians. In the seventeenth century, the rulers of Japanlikewise chose to isolate their country from the rest of the world. In later centuries,both countries were shocked to discover that some other nations had farsurpassed them technologically, economically and militarily during their self-imposed isolation. Among the other ways in which cultures handicap themselves is in limitingwhich segments of their populations are allowed to play which roles in theeconomy or society. If only people from certain pre-selected groups—whetherdefined by class, caste, tribe, race, religion or sex—are allowed to have particularcareers, this cultural distribution of economic roles can differ greatly from theindividual distribution of inborn talents. The net result can be that, by forfeitingthe potentialities of many of its own people, such a society ends up with a lessproductive economy than in other societies without such self-imposed restrictionson the development and use of their people’s talents and potentialities. History is full of examples of societies whose cultural norms confinedparticular segments of their population to particular roles, or even drove some oftheir most productive groups out of the country, because the prosperity of thosegroups made them targets of resentments that resulted in persecution, mob

violence or outright expulsions. Other societies whose cultures were less restrictive or repressive often benefitted economically from the arrival of refugees with valuable skills and talents, even if these refugees had little money with them when they arrived. Seventeenth century England, for example, benefitted from the arrival of tens of thousands of Huguenots fleeing persecution in France. Huguenots created the watch industry in London, as other refugees created other enterprises and industries in Britain. Similarly, Spain’s mass expulsions of Jews in 1492—forcing them to leave most of their wealth behind—led many to settle in Holland, where the human capital that they retained helped make themselves prosperous again, and helped make Amsterdam one of the world’s great commercial ports.{908} Over the centuries, tens of millions of people fled from various parts of Europe to the United States, whether to escape persecution or just to seek wider economic opportunities than were available to ordinary people in Europe. Many American industries were created, or greatly advanced, by immigrants who had been people of no real wealth or distinction in Europe, but who became economic titans in America, while transforming the United States from a predominantly agricultural country into the leading industrial nation of the world. Cultural isolation takes many forms, creating economic and other handicaps that differ from group to group and from one society, nation or civilization to another. Differing levels of cultural isolation within and between societies add to geographic and other factors making economic equality unlikely among groups, societies, nations or civilizations. Cultural Development Because not all cultures developed written versions of their languages at the same time, there has been vastly larger and more varied written knowledge available in one language than in another language, at a particular period of history. Thus, in the nineteenth century, Czechs, Estonians or Latvians who wanted