In a capitalist system, poor people are not poor because rich people are rich. Our friends on the left are wrong to view the economy as a fixed pie.
The same thing is true when looking at countries. Two years ago, I rejected the zero-sum notion that poor countries are poor because rich countries are rich.
- Is North Korea a basket case because Singapore is rich?
- Is Greece‘s economy moribund because Switzerland is prosperous?
- Is Venezuela poor because Chile became the Latin Tiger?
Obviously, the answer to all of those questions is no. What determines the success or failure of the above countries is economic policy. Some of them follow the right recipe. Others don’t.
Unfortunately, that’s a lesson some people don’t want to learn.
To make matters worse, there are people who actively push the wrong recipe.
In an article for the Washington Post, Christian Shepherd and Lyric Li discuss China’s effort to buy friends in the developing world. Here are some excerpts.
Chinese leader Xi Jinping on Wednesday laid out a vision for a revamped version of his signature “Belt and Road” investment initiative and promised continued economic support for nations that sign on to China’s remade world order. …Xi presented the plan as an alternative route to riches than that offered by the United States and other industrial democracies, which he accused of holding back developing nations with trade sanctions and demands for political reform. …His signature project has ballooned into a $1 trillion endeavor, but it is still only a loosely coordinated network of power plants, ports, roads and railways. It has generated significant controversy, with host countries like Sri L anka and Nepal struggling to overcome mounting debt distress… A white paper released last week lays out Xi’s bold claim that China, through the Belt and Road, offers a new route to wealth for nations disillusioned with Western-led globalization, and promises a greater share of spoils for the Global South if the world develops according to Beijing’s playbook. “It is no longer acceptable that only a few countries dominate world economic development, control economic rules, and enjoy development fruits,” the paper stated.
What’s really going on, of course, is that China is trying to buy friends with foreign aid.
But here’s a newsflash. There is no reason to think that Chinese foreign aid will be any more successful than American foreign aid.
So not only is President Xi peddling bad theory, he’s also pushing bad policy.
P.S. Not everything Xi said was wrong. Western nations do hurt developing nations (as well as themselves) with protectionism. And it’s also true that extraterritorial bullying by the United States causes resentment in affected countries (and helps to explain why many governments would like to end the dollar’s role as the world’s reserve currency).
P.P.S. The moral of the story is that poor nations should ignore China and the United States and take responsibility for their own economic future. The route to prosperity is simple and straightforward (though not popular with politicians since they have less power).
