Hi Steven Rogers; Great post. Re: "I’ve long believed that oil riches are not at all conducive to the evolution of good government in developing nations. ..."
This is true of every country that gets stuck with a single industry which exports something that the rest of the world will pay very well for. Oil requires a lot of technology, but as you say, only a small percentage of the population has to understand that technology. The same could be said of (at one time or another), of the Southern US and cotton, Argentina and leather, lots of places and gold, etc.
The basic problem (this is not a Bilow original, but is standard economic argument, but I don't recall exactly where I saw it) is that the exports of a country compete with each other. If there is a single dominant export, it will tend to drive the value of the country's money too high, which will suppress alternative exports, as well as fund importation of goods. The imported goods are cheap (in the country's economy), so there is no need for the process of industrialization that takes place when local industry replaces imports with home made goods.
In the U.S., if the farmers have a bumper crop and the rest of the world has bad crops, the resulting rise in the value of exports of food cause an increase in the value of the dollar that cause difficulty for companies that export other things. The basic principle is that exports compete with each other, and oil is the most competitive export of all, (taking into account the total dollar value).
-- Carl
P.S. Your post was not too long, certainly not "way too long", but maybe my opinion is not the one you want to judge by. |
