Culture Matters – Oil Curse Edition
The concept of the so-called Oil Curse is that countries that have an abundance of oil tend to be basket cases – undemocratic, kleptocratic, and poorly developed. The Oil Curse is a special case of of what is sometimes called the Resource Curse.
Of course, not every country rich in oil has suffered from the Oil Curse. Norway is a prime example of a nation that has benefited greatly from finding oil, but it is almost the exception that proves the rule.
On the other hand, if you think about it more broadly, there are plenty of other exceptions. The big one is England. Historians seem to think one of the reasons that the Industrial Revolution began there is because England had plenty of easily accessible coal and iron. Which is to say, England struck oil, or at least the 18th century version of it. Similarly, the oil boom that began in Titusville, PA around 1860 did great things for the US economy.
So what causes oil to be a curse for some countries but a boon to others? One explanation commonly brought up is exploitation, particularly by Western oil companies. I am no historian, but I don’t think this is right. Many of the Oil Curse countries chose to go it alone, though some did so after expropriating the initial investments made by foreigners.
I think countries that appear to fall prey to the Oil Curse or any other Resource Curse don’t actually do so. Instead, they are basket cases before the discovery of whatever resource, and they remain basket cases after. On the other hand, countries that have functional economies that encourage innovation tend to find stumbling upon a resource to be a blessing.
Put another way… having a culture that is conducive toward positive outcomes matters a lot. And it seems to me that England on the verge of the Industrial Revolution, the US before 1860, and Norway before it stumbled on oil have a lot, culturally in common. And the cultural traits those three cases have in common don’t seem to be shared by Oil Curse countries.
As I keep pointing out, the data shows that culture is a strong determinant of economic outcomes..
How can culture NOT be a determinant of economic outcomes. The US culture of “rugged individualism” has gotten in the way of single-payer health insurance, free college education, UBI, and so much more that other countries have or are testing. But the USA can’t because culture
Wait a bit. There are plenty of people who post in comments that culture cannot matter, and that if you randomly selected 100 Japanese people and 100 Afghanis and dropped them into downtown Copenhagen for ten years, both groups would fare exactly the same. Or rather, they would but for the fact that the notoriously racist Danes will favor their blond-haired and blue-eyed brethren from Japan.
More seriously, cultures have both positives and negatives. It would be nice if it were politically feasible to discuss how cultures affect outcomes and how cultures are transmitted in order to figure out how to encourage the positive parts of a person’s cultural baggage and discourage the negative parts.
Lordy, Kimel. Carol is new to this interminable subject of yours, so she thinks you’re claiming that some people think a COUNTRY’S culture does not impact THAT COUNTRY’S economic outcomes. She doesn’t yet know that what you’re ACTUALLY claiming is that immigrants and their kids and grandkids function well in the economy in the immigrant’s new country, or don’t, based upon the culture of the immigrant’s country of ORIGION.
So Carol will have to wait a very long time before someone here claims that a COUNTRY’S culture does not impact THAT COUNTRY’S economic outcomes. A very, very, very long time.
Carol, Kimel doesn’t have this distinction-between-apples-oranges-and-elephants thing quite down yet. So he thought you thought he was talking about what he was talking about, even though it’s clear from your comment that you thought he was talking about something else—something that actually is (obviously) true, rather than something that is, well, not.
You should look on the bright side of things, Beverly. Mike Kimel is using his considerable analytical and rhetorical skills to amuse the readers of ANGRY BEAR, rather than standing up on a soapbox in the open or blogging at some other website where his notions might influence impressionable but ignorant Trump supporters. We’re all SAFER while he’s here.
Beverly and Mike Shupp,
I figured the little analysis I did in the post I linked to was probably done by someone else at some point. And wouldn’t you know it, Google brings me to this policy paper by the Social Security Admin:
Which is exactly what I have been writing. And their chart 3, which they took from a paper by Heston and Summers, looks a heck of a lot like my charts though they used a different data set than I did. This is not difficult stuff to replicate.
The SSA cannot afford to make silly assumptions that 100 Afghani immigrants will have the same outcomes as 100 Japanese immigrants. So they don’t. And just to be sure, they checked the data.
Oh… and another quote from the SSA paper:
If it sounds familiar it’s because you’ve been mocking it for a while now.
And btw, it isn’t just in the US. Allow me to quote Statistics Canada:
You do understand what they mean when they note that changing source regions of the immigrants was a big factor in changing the percentage of immigrants with low immigrants, right? It is exactly what you insist over and over again isn’t true.
What is sad I am pretty sure you know it’s true too. It doesn’t take looking at data to notice that in the US, the ratio of Central American immigrant roofers to Central American immigrant scientists far exceeds the ratio of Scandinavian immigrant roofers to Scandinavian immigrant scientists.
I have stated before (8 years ago, in fact) that you don’t deport over ten million people. You incarcerate their employers. When economic opportunities dry up, people who got here on their own leave on their own. Of course, you would still have to deport the criminals and predators who have non economic incentives.
Ooooo. Mike’s discovered that some pretty high-falutin’ people, including Larry Summers and some statisticians at the Social Security Administration, dug deeply into research and discovered that people with graduate degrees in science, technology, engineering, medicine and the like are much more likely than people with only high school level educations to have high incomes—and that that includes immigrants!
Just like Mike did! They all discovered the same thing! But only one of them calls this “culture” and says it means that immigrants without graduate degrees in science, tech, engineering, medicine and the like will live in poverty—that culture thing, see—and that their kids and grandkids will, too, cuz of the culture in the immigrant’s country of origin.
I won’t tell you WHICH of these experts is that one, but I’ll give you a hint: It’s not the statisticians at the Social Security Administration, and it’s not Larry Summers.
You do have a point, Mike Shupp.
Of course the oil curse is true! Exhibit 1: Texas!
What you are missing is the difference between endogenous and exogenous factors. Statistics Norway journal published an article (translated here. Make your way down to, say, Table 5. In it, you can see that there is a large difference between the likelihood that immigrants to Norway and Denmark who enroll in school in Norway and Denmark will finish, and the disparity can be measured across country of origin Table 7 looks at more countries, and not just immigrants but descendants of immigrants. So for example, they find that Vietnamese immigrants are far more likely than Somali (to pick two from the graph) immigrants to be in higher education in either Denmark or Norway. Likewise, the descendants of Vietnamese immigrants are far more likely than the descendants of Somali immigrants to be receiving a higher education in Denmark or Norway.
Do you believe the Danes and the Norwegians are discriminating against the Somalis and in favor of the Vietnamese? Or is there some cultural factor that on average Vietnamese immigrants bring with them, and pass on to their children, which is different from the culture that the Somali immigrants, on average bring with them. I assume you know the same gap (i.e., between educational outcomes of Vietnamese immigrants v. Somali immigrants) exists in the US.
So sure, education affects income, but education isn’t simply some endowment handed down by the gods. A Vietnamese immigrant to Denmark, will, on average, make more than Somali immigrant, and likewise the child of the Vietnamese immigrant will on, average, make more than the child of the Somali immigrant. And yes, that is partly due to education. But you beg the question if you don’t explain how the Vietnamese immigrant ends up with more education than the Somali immigrant, or how the child of the Vietnamese immigrant gets more education than the child of the Somali immigrant, on average.
Another interesting factor about this study is how similar average outcomes people of country X (for the various Xs they look at) end up, whether they end up in Norway or Denmark. There is no particular reason why, say, an Iraqi should have about the same outcome whether he/she end up in Norway or Denmark given the two countries have sufficiently different systems of education, different welfare policies, different numbers and treatment of immigrants, etc. The most likely explanation is that there is something about the Iraqi that doesn’t change whether he/she ends up in Norway or Denmark.
Of course, not all Texans curse.
It is a horribly expensive price to pay to keep the country safe.
PERFECT, JackD. Absolutely BEAUTIFUL.
It is, indeed, EMichael. Still, seeing a perfectly good blog ruined is the lesser evil. The more patriotic one, anyway.
Oh, gosh, and to think I thought you’d said in your most recent comment before this last one that it’s the economy of the immigrant’s original country that matters, and that the immigrant’s culture, which he or she doesn’t leave behind, determines economic success in the immigrant’s new country, Mike.
You know what, Mike? You should visit southeastern Michigan sometime. Where there are, like, lots an lots of Iraqi immigrants and children and grandchildren of them. Or, for that matter, the Toronto or Ottawa areas, where there also are large numbers of Middle Eastern immigrants and children and grandchildren of them—and, OMG, some Somali immigrants and their children.
Maybe, there’s, like, this important difference between emigrating to a country established largely by immigrants—a.k.a., the New World—and one whose native population is entirely dominant.
And maybe you should at least TRY to stop pretending that your point and your purpose is other than what it is.
I truly can’t believe that this is occurring on a blog that ostensibly is politically and economics-wise left-of-center. And the comments in these threads, for months and months now, indicate that I’m not exactly alone in my surprise and revulsion.