The First Circle

There are a lot of interesting and useful statistics on various U.S. Government websites and one of the most interesting sets of statistics is made available by the USDA. It is of GDP for most of the countries of the world going back to 1969. The USDA collects this data because they want to be able to estimate how much U.S.-sourced grain particular countries might be able to afford. This is what you get when you convert that data to a per capita basis and graph up some of the major countries and regions:

What is immediately apparent is that the world is divided into two types of countries – those with GDP per capita in the range of $30,000 to $40,000 and those under $10,000. There is nobody in the gap between. And there is nobody moving out of the lower group. One would have thought that there may have been some convergence as the poorer countries copied what was done in the wealthier countries. But there has no copying and no convergence. Things hadn’t changed for 40 years in the poorer group and thus they will never change. It is not as if copying what the wealthier countries did would be painful -- it would be immediately rewarding. But still no copying.

Let’s get that same group and replot them with the U.S. as 100% and the other countries and regions as a percentage of the U.S. GDP per capita:

This shows more starkly that there is no movement between the groups. The top group are the OECD countries. The bottom group is a collection of basket cases. What distinguishes one group from the other is respect for private property. The OECD group has it, the people in the basket cases would rather steal from others than work themselves. Or perhaps they don’t work as hard as they might because the fruits of their effort would be stolen from them. The effect is the same. Unfortunately the OECD secretariat based in Paris has betrayed the founding principles of the organisation and started promoting global warming and other misanthropic notions. 

These two graphs tell us how to interact with the rest of the world. There are people like us and then there are people we wouldn’t invite home to dinner. Our only natural friends and allies are those with similar values. The rest will always have a problem with us because they cannot explain in their words why they are poor and we are not.  So that there is no doubt, those countries remain poor because they choose to have cultures that keep them poor.

The former Naval War College analyst Thomas Barnett provided some useful terminology for this state of affairs in his 2004 book The Pentagon’s New Map. He divided the world into the Functioning Core (countries that tended not to have wars) and the Non-Integrated Gap (countries that tended to attack each other). To borrow one of his terms, the OECD countries are the Core and everyone else is Non-Core. Countries in the Core should provide mutual support to each other when needed and police the Non-Core. 

It also follows that all foreign aid is wasted. Core countries don’t need it and it makes no long-term difference to Non-Core countries. They will simply slide back to whatever level of civilisation they are comfortable with when the aid stops coming. They have to change their culture for any improvement to endure. While not common, that can happen as shown by the countries in the cone of South America. This graph shows the GDP per capita for Chile, Brazil, Argentina, and Bolivia from 1969 to 2011:

Back in the early 1970s, Chile was a lot poorer than Argentina. Then General Pinochet overthrew President Allende who shot himself with a rifle that was a present from Fidel Castro. Chile took a few years to settle down and then started outperforming its peers. The reason for that is Chile has a better legal system than the others. If you make money in Chile, you are more likely to be able to keep it. There is a similar story in eastern Europe as shown by this graph of Russian, Polish, and Ukrainian GDP per capita:

The Ukrainians have the same standard of living that they had 40 year ago. Ukraine has gone the way of most corrupt societies -- a handful of fabulously wealthy people and everyone else afflicted by a thieving bureaucracy. Russia is like the Ukraine but with substantial oil and gas production. Poland, by contrast, had one bad year after the fall of communism in 1990 and then took off, simply due to a better legal system. The Ukrainians and the Russians could catch up with Poland if they wished to.

Cultures can also degenerate of course. The poster child for that is Argentina which, one hundred years ago, had a GDP per capita which was 80% of the U.S. level. The rot started in 1916 with the election of President Hipolito Irigoyen of the Radical Party. Health insurance and the taxes to pay for that were part of the downward spiral:

There are a lot of interesting and useful statistics on various U.S. Government websites and one of the most interesting sets of statistics is made available by the USDA. It is of GDP for most of the countries of the world going back to 1969. The USDA collects this data because they want to be able to estimate how much U.S.-sourced grain particular countries might be able to afford. This is what you get when you convert that data to a per capita basis and graph up some of the major countries and regions:

What is immediately apparent is that the world is divided into two types of countries – those with GDP per capita in the range of $30,000 to $40,000 and those under $10,000. There is nobody in the gap between. And there is nobody moving out of the lower group. One would have thought that there may have been some convergence as the poorer countries copied what was done in the wealthier countries. But there has no copying and no convergence. Things hadn’t changed for 40 years in the poorer group and thus they will never change. It is not as if copying what the wealthier countries did would be painful -- it would be immediately rewarding. But still no copying.

Let’s get that same group and replot them with the U.S. as 100% and the other countries and regions as a percentage of the U.S. GDP per capita:

This shows more starkly that there is no movement between the groups. The top group are the OECD countries. The bottom group is a collection of basket cases. What distinguishes one group from the other is respect for private property. The OECD group has it, the people in the basket cases would rather steal from others than work themselves. Or perhaps they don’t work as hard as they might because the fruits of their effort would be stolen from them. The effect is the same. Unfortunately the OECD secretariat based in Paris has betrayed the founding principles of the organisation and started promoting global warming and other misanthropic notions. 

These two graphs tell us how to interact with the rest of the world. There are people like us and then there are people we wouldn’t invite home to dinner. Our only natural friends and allies are those with similar values. The rest will always have a problem with us because they cannot explain in their words why they are poor and we are not.  So that there is no doubt, those countries remain poor because they choose to have cultures that keep them poor.

The former Naval War College analyst Thomas Barnett provided some useful terminology for this state of affairs in his 2004 book The Pentagon’s New Map. He divided the world into the Functioning Core (countries that tended not to have wars) and the Non-Integrated Gap (countries that tended to attack each other). To borrow one of his terms, the OECD countries are the Core and everyone else is Non-Core. Countries in the Core should provide mutual support to each other when needed and police the Non-Core. 

It also follows that all foreign aid is wasted. Core countries don’t need it and it makes no long-term difference to Non-Core countries. They will simply slide back to whatever level of civilisation they are comfortable with when the aid stops coming. They have to change their culture for any improvement to endure. While not common, that can happen as shown by the countries in the cone of South America. This graph shows the GDP per capita for Chile, Brazil, Argentina, and Bolivia from 1969 to 2011:

Back in the early 1970s, Chile was a lot poorer than Argentina. Then General Pinochet overthrew President Allende who shot himself with a rifle that was a present from Fidel Castro. Chile took a few years to settle down and then started outperforming its peers. The reason for that is Chile has a better legal system than the others. If you make money in Chile, you are more likely to be able to keep it. There is a similar story in eastern Europe as shown by this graph of Russian, Polish, and Ukrainian GDP per capita:

The Ukrainians have the same standard of living that they had 40 year ago. Ukraine has gone the way of most corrupt societies -- a handful of fabulously wealthy people and everyone else afflicted by a thieving bureaucracy. Russia is like the Ukraine but with substantial oil and gas production. Poland, by contrast, had one bad year after the fall of communism in 1990 and then took off, simply due to a better legal system. The Ukrainians and the Russians could catch up with Poland if they wished to.

Cultures can also degenerate of course. The poster child for that is Argentina which, one hundred years ago, had a GDP per capita which was 80% of the U.S. level. The rot started in 1916 with the election of President Hipolito Irigoyen of the Radical Party. Health insurance and the taxes to pay for that were part of the downward spiral:

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