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Why Are Third World Countries So Poor?

I would like to start this topic with the following premise: there is no reason that the whole world cannot be as prosperous as the United States, and, there is no limit to the potential economic growth of the United States. The human population of our planet (currently at about 7.5 billion) is minuscule compared to its capacity, not only to sustain life, but to allow for every human on this earth to live a life in comfort and good health. But unfortunately, in many parts of the world we have squandered our natural resources and governments have used political and military force to subjugate the many while enriching the few.

The Modern Third World

In the 1970’s and 1980’s more than 90% of economic aid to the third world went to massive power plants; however, in many cases there was no fuel to run the power plants and except for roads, there was no infrastructure, no skilled labor or qualified management, no replacement equipment or spare parts if something broke down, and even if there had been, there was no maintenance personnel to fix the problems. Aid agencies were also clueless as to the international market niches that could be supplied by the products of third world countries. How then, could these economic weaklings develop into western-style industrial behemoths?

The simple answer is that we didn’t want the industrial competition or cheap labor that was and is abundant in the third world. What we wanted was compliant non-communist countries that wouldn’t nationalize their natural resources and would vote as desired by the U.S. when it came to the United Nations. Therefore, while our political leaders preached the ideals of democracy, our espionage agencies were instructed to topple democratically elected communist leaders in favor of authoritarian military thugs who could be bought with American dollars. In return, we were assured of cheap raw materials and agricultural products. The result was continued third world poverty, repression and subjugation. We replaced colonialism with an equally brutal neocolonialism that continues to exist today. And, unfortunately, those countries that did turn communist were often ruled by a different set of military thugs. Congo, Ethiopia, Mozambique, North Korea, Venezuela and Cuba are some current examples.

What the West failed to realize, however, was that in Sub-Saharan Africa alone, there is a population of almost one billion people. That means one billion potential new consumers with purchasing power. Just imagine the export opportunities for the United States. Not to mention the increased standard of living and quality of life for the African people.

Why Power Plants?

In some cases, they were needed to more efficiently extract, process and ship natural resources, as in the colonial era. In other cases, they were desired by the country’s elites in order to have modern conveniences. But in most cases, they were simply a way to funnel billions of dollars to big United States-based (and politically connected) construction, engineering, and consulting firms. The process worked sort of like this: consulting firms would send teams of economists to third world countries. The purpose was to evaluate the long-term economic benefits to various countries of building hydroelectric plants. The economists would write reports that were intended to sell the idea to the World Bank of loaning billions of dollars to third world dictators, who cared very little about economic development, but cared very deeply about billions of dollars. The reports were very detailed and accurate in describing a country’s current situation and the estimated costs of building a proposed power plant — but when estimating the economic impact of the investment and true benefits to the people, the reports were entirely self-serving and fictitious (Perkins, John, 2004 Confessions of an Economic Hit Man, 2006, Plume, a member of Penguin Group (USA), Inc.)

By 1994, third world debt was approximately $1.2 trillion, with interest accruing at $50 billion every year. Today, that debt has been cut in half, but is still economically crushing. Instead of raising overall standards of living, the money went to increase the wealth of third world elites, and to build hydroelectric plants that were never intended to power industrial awakenings. Instead of repaying the debt from business expansion, countries were forced to pay creditors by stripping and selling-off their natural resources.

What About International Aid?

Contrary to popular opinion, charity inhibits economic growth. First, if someone is willing to give you something for free, why work? Second, if you ship tons of free clothes, then local textile mills will never need to exist. Third, if you ship tons of free food, local farmers will go out of business. Finally, when the foreign aid ceases or is delayed, those in dependency will starve. Relief agencies are important as stop gap and emergency measures to provide food, medical attention and other necessities, however, much of the third world has become permanently dependent on the 3.7 million Non-Government Organizations (NGO’s) that control trillions of dollars from governments and other donors. What third world countries need is to be economically, politically and socially unshackled from the chains of oppression and war.

In the new millennia, reforms have been made, but the centuries of colonialism, neocolonialism, repression and subjugation have left an open wound on the third world that has not healed.

In the book, Why Nations Fail: The Origins of Power, Prosperity, and Poverty, Daron Acemoglu and James A. Robinson argue that nations and their inhabitants are poor because for centuries they have been forced to survive under oppressive government regimes. They are not poor due to climate, geography, or innate human characteristics that are different from people in richer nations.

Human Nature

Every human on this planet shares a common ancestor. We are so closely related genetically that if we were dogs, we would all be the same breed. (Races are not even recognized as biologically valid entities.) In fact, scientists have now concluded that the DNA inherent in every human on earth is approximately 99.5% identical and that most of the variation is from humans within their respective populations! Therefore, while we are all members of the human race, we are also divided into several distinct racial groups, and within each race are sub-groups. Then of course each individual has inherited from his or her parents their own personalized genetic characteristics. That being said, the differences in culture, religion, language, and values are far more significant than the genetics of race or ethnicity. For example, a baby adopted from Korea by American parents will, as a teenager, behave and sound like every other average American teenager. On the other hand, the same Korean baby if raised in Korea will, as a teenager, behave and sound like every other Korean teenager.

As we mature, our brains are wired to be part of a group, similar to a dog’s brain, which is wired to be part of a pack. Therefore, it is a part of human nature to organize into groups, or what I refer to here as collectives. We can think of collectives as nothing more than extensions of our tribal instincts that developed over the 200 thousand years of our existence as a species. A side effect of this process is a collectivized form of “Ego-centrism.� Meaning that in diverse societies we cling to and trust those who are most similar to ourselves. In other words, those who look like us, sound like us and share the same values, religion and culture. Of course, this doesn’t mean that individuals, families, and other groups can’t and don’t cross racial, religious, or cultural bounds, but it does mean that they must find common threads that bind them together, superseding the differences, whatever they may be.

In spite of the fact that we are all born equal in the eyes of God and nature, our ego/collective-centric tendencies drive illogical feelings of superiority. We feel that our religion, political party, ethnicity, nationality, organizational affiliations, sports teams, sex, sexual orientation, tribes, clans, class, family, values and ideas (I consider all of the above collectives.) are the best, the most-right and the most-valid. And that our needs supersede the needs of others. Our competitive/territorial spirit cause us (at least to attempt) to dominate, convert, defeat, control or in extreme cases destroy competing collectives. Interestingly, we can easily detect these tendencies in others, but are often blind to our own collective/ego-centric inclinations. These factors, plus a quest by some for wealth and power, have caused almost all human struggles and political agendas. It is worthwhile to note that the same tendencies we demonstrate through human nature as individuals are extrapolated to collectives, since they are nothing more than groups of individuals.

The path to world peace and world prosperity is simple. In 1990’s parlance, we all just need to “get over ourselves.� Those in power need to fight their own collective/egocentric tendencies and ask the question what is best, not just for me and my collective, but for society and all humanity?

Of course, the United States is incapable of meeting all the welfare needs of the world and we cannot be responsible for remediating every evil. We should also remember that it is our tax dollars that fund the functionings of the United States government. Therefore, providing for the welfare, security and prosperity of U.S. citizens should be the first priority. With that being said, however, there is still an enormous amount of good that we can do around the world.

So, what role should the United States play in defending and enhancing world peace and in the process, international prosperity? The first is redefining our national interests to those that respect all people’s rights of self-determination instead of politically-based alliances. The second is strengthening international legal, economic and political bodies. The third is the gradual squeezing out of oppressive governments. The fourth is to support international efforts to peacefully fill political vacuums. The fifth is to encourage value-based governments and value-based economic systems to create value-based societies around the world. Finally, all governments need to respect private property, encourage foreign investment, foster entrepreneurship, invest in both infrastructure and education, levy fair and predictable taxes, provide for equal treatment under the law, vigorously engage in foreign trade, and then leave their people alone.

(From the book Greed, Power and Politics, the Dismal History of Economics and the Forgotten Path to Prosperity, by Daniel Cameron)

marvelous. Daniel ,you have just expressed about the main core of third world's problem.. appreciate

Daniel wrote: "Why Are Third World Countries So Poor?

I would like to start this topic with the following premise: there is no reason that the whole world cannot be as prosperous as the United States, and, there..."

Daniel, of course no country is squeaky clean just as no culture is. However Ameticans are patriots. There lies their strength. Love thy country and fight for freedom of expression. Yes, America should never have assumed greatness over less able countries or poked their nose in the politics of other countries but they have also helped many people. Look at Nth Korea today. So many people there have been through hell and back and who cares? We mustn't touch that country!

What would have happened in Nazi Germany if America had not entered the fray? Yes there are gross acts of World superiority by leaders of the US but I still think it has done many good things and I would rather see it as leading the world and not a NWO which entirely takes away the autonomy of each and every country to manage it's own affairs. Where would the world and poor countries be without the aide of wealthy countries who sink billions into these poor countries. By making rich countries as poor as the poor countries solves nothing.

The reason poor countries remain poor is mostly their infighting. Tribal and religious wars abound and dictators take over. The West throws money at their problems but each country has to devise ways of solving their own problems. Now their problems are becoming the problems of Western nations who have got bored with their status quo and now call themselves "progressive" thinkers. We are heading down the same path as poor countries. I say - love the country you were born in with passion and work to improve it, not condemn it or run away from it.

One last thing. Many people in the USA cannot be decscribed as prosperous except to say they probably have more food to eat than poor countries whose dictators take all the "gold" for themselves.

Laureen wrote: "Where would the world and poor countries be without the aide of wealthy countries who sink billions into these poor countries...."

those countries would mostly be rich.
Our nations essentially got so prosperous off the back of the Third World.

Also, we do not sink billions into these 3rd World nations without serious conditions....Those billions we supposedly "give" return trillions in profit to us...In the fine print of contracts from the likes of the World Bank, IMF, USAID, you'll see if these nations cannot repay loans in timely fashion and meet the hellish interest rates, we get their mineral resources and various other things.

Suggest read Confessions of an Economic Hitman as a good introduction to this process.

Given that I come from one...
I'd say corruption
Uneven distribution of wealth
In some cases ethno-eliticism
And given the fact that most third worlds are colonies which have no more than 60 years of indipendence, we're also quite young to the concept of "western economy" unlike our first world brethren who have centuries of experience under their belts...

This is a big topic, and I can only touch on a few points...

First, I would challenge anyone who sets up America as the standard image of a prosperous nation. America's debt is greater than that of the entire Third World, and its poverty gap rivals many Third World nations. The costs of healthcare and education are among the highest in the world (Healthcare is difficult to estimate, but only Canada and Australia charge more for education). It was also pointed out to me by a French friend that American transportation is exceptionally slow and expensive, not unlike developing nations. In places like San Francisco, for example, cheap public transportation has been purposefully dismantled by the automotive and oil industries. Finally, I would note from personal travels that many countries enjoy higher standards of living. For example, I recently returned from Japan, where trains always run on time, where pollution is so mitigated that you can't even smoke a cigarette on the street, and where every bathroom stall is like a private spa. (Granted, it's expensive--but they have MUCH lower taxes).
As for charity, that's another complicated subject, and I've written more in my book, Gods of the Flesh. I agree with most of Daniel's and James's points, and I would add a line from James Loewen: "Today Americans believe as part of our political understanding of the world that we are the most generous nation on earth in terms of foreign aid, overlooking the fact that the net dollar flow from almost every Third World nation runs toward the United States."
I did find Daniel's final paragraph a little naive. So far as I've seen, the root of most Third World problems owes to the destabilizing effects of colonialism and imperialism (militaristic or economic). In these respects, America has played a star role. For example, rather than "squeeze out oppressive governements," the main thrust of American military history has been to squeeze out democratic governments. The twentieth century saw American puppet governments established in countries like China and Cuba. There followed a series of American-sponsored coups and assassinations in Guatemala, Congo, Chile, and other countries. Recently, we have lent support to dictators in the Middle East, while totally destroying the infrastructure of many countries, making sane and peaceful government impossible and creating vacuums that can only be filled by terrorists.
One problem I've noticed with the subject of world peace is that people look at it from a strictly economic perspective: Yes, it would be easy to obtain. But there are psychological barriers--and not only for the privileged classes who struggle with racism, xenophobia, sexism, etc. Imperialism can have devastating and lasting effects on the psyche of entire cultures. Take a look, for example, at the Native American nations within America's borders. Many of them could be described as Third World countries--but how did they end up this way? For centuries, their leaders were killed; their communities were forced off every good patch of land in the continent; their possessions were stolen, confiscated or destroyed; they were forbidden to practice their religion and arts, and even forbidden to speak their own languages; their people were raped and brutalized, and their destitute communities purposefully flooded with drugs and alcohol from American markets. Today, people complain that there are scholarships and jobs available for the lazy, ungrateful Natives--but have you seen the reservations? If every family you knew had someone who had been driven into poverty and alcoholism, if every family you knew had someone who had been kidnapped, raped or murdered--could you simply lift yourself out of that situation? Would a college degree and a good job really change things for you? Would you want to be part of the world that did this to *your* world?
Third World problems are First World problems, and Americans will need a radical overhaul in cultural values before we can deserve to lead the world.

Israel wrote: "This is a big topic, and I can only touch on a few points...

First, I would challenge anyone who sets up America as the standard image of a prosperous nation. America's debt is greater than that o..."

Israel - Lots to digest in your post. Thanks for the contribution. I especially resonated with the section devoted to Native Americans. It inspired me to start a thread devoted to their plight, and I've included your comments as you'll see... /topic/show/...

One basic problem is that economists seem to rank prosperity by GDP, and here the US shines. The problem is debt has been buried, the fact the US prints the world reserve currency (for the moment) is overlooked, and the distribution of wealth is extremely uneven, with the result that for roughly half of the population, many of the services we desire are unavailable. This applies to a number of other countries too, although to a lesser extent.

Where this will go is unclear because Trump is changing the rules by picking on specific foreign companies. Thus Huawei may be in deep trouble for a while, but will the rest of the world decide that the US may be an unreliable supplier to be dependent on.

As for the third world, The US and Europe have a very bad track record. The following book is a good description of how not only did the wealthy pick up a lot of products very cheaply, but they also encouraged and aided the dictators to strip what little was left from their people.

That's an interesting little essay, Israel. As you say, it's a big subject; it involves world socio-economics, anthropology and geo-political history. I think as a starting point one has to discuss pre and post industrial revolution separately An interesting ( and immensely well-researched) book, A Fistfull of Shells by Toby Green recounts an Africa prior to European influence and argues that that continent had more influence on the development of Europe than vice versa.
Of course, where post industrialisation met pre industrialisation (as with Native Americans) the results are not surprising, nor is the human greed that spawned that particular disaster. The ogre of Corporatism that opened up the US still drives all that nation does to this day. I agree with your brief notes of some of the fault lines there - but there are so many others distorting the many misconceptions that nation has of itself. Another recent book, How To Hide an Empire (Daniel Immerwahr) tackles that subject with succinct observation.
But colonialism is less clear-cut. For every hurt to native culture there are many advantages that some colonialisation brought with it. When I researched the English civil wars I was astonished to find many contemporary scribes were blaming all the ills of the country on the Norman invasion six hundred years before. But few intelligent people would dispute that we benefited considerably from the Roman occupation even earlier. When considering socio-economics one should always remember that people are the same animal at any juncture of history.

Another point worth mentioning is that in New Zealand, prior to colonization, the life expectancy was about 35 yrs old. Now, while the Maori still have troubles, their life expectancy is far higher, and might even equal ours if they would quit smoking so much

Ian wrote: "Another point worth mentioning is that in New Zealand, prior to colonization, the life expectancy was about 35 yrs old. Now, while the Maori still have troubles, their life expectancy is far higher..."

Very true Ian, but it's also worth noting average life expectancy in the UK at one stage in the Middle Ages was only a shade over 31 years...so it seems we whities also had our share of troubles.

A big killer of Maoris prior to muskets (so I'm told) was disease of the gums as a result of coarse foods (ferns, roots etc.) they ate when times were hard as they often were, and disease (probably lung cancer) resulting from smoke inhalation as a result of their poorly ventilated huts.

Any Maoris in the group? If so, Kia ora to you. Love to receive your input.

Yes, Lance, life in Medieval Europe was harsh, and probably worse than that of the Maori, but the point I was hoping to make was to consider the options at the time of colonization. Interestingly, in the first few years after 1840, the Maori were responsible for the bulk of NZ exports - sending crop produce to Sydney. It was the subsequent events that actually set them back

Ian wrote: "Yes, Lance, life in Medieval Europe was harsh, and probably worse than that of the Maori, but the point I was hoping to make was to consider the options at the time of colonization. Interestingly, ..."

Understood. They were brutal days. Interesting that Maoris were such successful exporters. I never realised that.

“So one one of the laws of capitalist motion and development is this inexorable expansion, and that means expansion into and expropriation of the third world.

A process that's being going on for about 400 years. Perpetrated by the Portuguese, the Spaniards, the Dutch, the Belgians, the French, the English, and most recently, most successfully, most impressively by the Americans.

[The perpetrators are] the ruling classes of these countries, not by the ordinary people. The ordinary people simply paid the costs of empire. The ordinary people simply sent their sons off to die on the plains of India and the jungles of the Congo or in Latin America wherever else.

That expropriation of the third world has been going on for 400 years brings us to another revelation; namely that the the third world is not poor. You don't go to poor countries to make money. There are very few poor countries in this world. Most countries are rich! The Philippines are rich, Brazil is rich, Mexico is rich, Chile is rich only the people are poor.

But there's billions to be made there to be carved out and be taken. There's been billions for 400 years, capitalist European and North American powers have carved out at taken the timber, the flax, the hemp, the cocoa, the rum, the copper, the iron, the rubber, the bauxite, the slaves, and the cheap labor, they have taken out of these countries.

These countries are not underdeveloped, they're over exploited.� - Michael Parenti, 1986

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