Why are nations unequal? Apparently a simple question but hard to answer. I am writing a set of columns on that topic with reference to India. Here’s part 1. A slightly different version of this appeared on NitiCentral.com earlier this month.
All Men are Created Equal but Nations are Not
Written by Thomas Jefferson in 1776, the United States Declaration of Independence asserts, “We hold these truths to be self-evident, that all men are created equal, . . .” The truth of that claim is by no means self-evident if one were to note that every individual is unique in his or her endowments. Equality is the last thing you will observe in any interpersonal comparison along any dimension, physical or mental.
But if you were to shift your focus from the individual to any sufficiently large collective, the assertion that all people are created equal is more tenable. No people are intrinsically superior or inferior compared to other groups in any significant way. Random draws that we all are from the same human gene pool, the averages even out the individual differences and every large collective has the same innate potential as any other.
Europeans, for example, are not as a collective more intelligent (whatever that means) than say Asians. The innate intelligence of individuals in both groups will be distributed as normal (Gaussian) curves with essentially the same mean, median and mode. We can easily estimate how many people in any collective will be born geniuses and how many morons, and find that there are no systematic deviations in any population. All populations are created equal – even though all populations don’t end up equal in any sense of that word. That’s a fact we have to admit and deal with. Potentially they are all the same but the outcome is distinctly unequal.
Potential is one thing but the expression of that potential is quite another. Nature provides the raw material but nurture acts on the potential and reveals the actual. How much prosperity or poverty a person enjoys over a life time is almost entirely dependent on another random draw: one’s place of birth. All countries are not created equal and one’s life trajectory is constrained by the country of one’s birth.
Which brings up the question that has engaged economists for ages: why are some countries rich and others poor? Adam Smith, the great granddaddy of modern economics pondered that question and addressed it in his magnum opus “An Inquiry into the Nature and Causes of the Wealth of Nations” which was published in 1776, incidentally the same year as the work cited above, the United States Declaration of Independence.
Smith was a moral philosopher and was interested in asking questions that bear upon human action and human welfare. What is the source of wealth? What can be done about poverty? Those are persistent questions that infect the mind. If you start thinking about them, it is hard to stop. Why are some nations poor while others rich? The particular variant of that general question that fascinates me because I am an Indian is why is India poor?
Looking for single causes of complex questions such as that is futile. There are too many variable with complicated interdependencies and circular causations that it is impossible to arrive at a simple, definitive answer. There are no ultimate causes, only intermediate ones. The best we can do is to note some of the causal dependencies and know that our answers will always be qualified and conditional.
One possible reason why a country is poor is that it lacks natural resources. Absent minerals that are economically valuable and required for sustaining economic activities, it is poor. Perhaps it is a desert with nothing of any value. In other words it is natural resource starved and therefore poor.
Another reason could be that even though it is rich in resources, it is continually being invaded by outsiders who strip it all of its assets and therefore it is poor. We would say it is poor because regardless of what it produces, it is being systematically robbed by invaders.
Still another reason could be that there is civil strife. Internal conflicts between different groups ruin any chances of the sustained growth of wealth. Civil wars, for example, bleed the country internally and people cannot produce anything while hiding to stay alive from continued conflict.
Perhaps a region or a country is neither poorly endowed or is not being robbed by external aggression or facing civil are but it is the victim of natural disasters. From time to time, huge natural calamities are visited upon that land and therefore it is poor. Earthquakes perhaps destroy all that the people have built, or maybe huge volcanic eruptions lay waste all that is created. Perhaps drought or floods engulf the region.
Spared natural disasters, perhaps the people are systematically stupid that they are unable to create wealth that is required for a decent life. They don’t have the human resources to create wealth. Lacking a good civilization, they are embroiled in domestic disputes that make it impossible to sustain a good society.
India’s evident poverty in modern times cannot be due to any of those reasons. Nature is not unkind to it, nor is it subject to periodic disasters. Though in the past, India has attracted unwelcome foreigners, it has not been invaded for at least a century. It is not being systematically invaded by foreign forces. There have been internal conflicts but nothing as devastating that can cause it to be impoverished.
Indians are not stupid. They are as talented as any other people on earth. Indians abroad have done quite well. As immigrants they have prospered more than their compatriots in India. One can argue that people who migrate are generally more enterprising and risk-taking, and therefore are more likely to succeed. That is true but still that fact goes to show that Indians as a people are not exceptionally stupid.
India has a deep history that goes back millennia. Its people are as talented as any other. So what can possibly account for India’s failure to prosper? We must address this question if we have to figure out how to get out of the doldrums that India is in.
[Continued in part 2 of this series: “India Suffers from Bad Governance“]
Life is a Random Draw 
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