Tracing the Roots of the Wealth of Nations ~ Oded Galor

Wealth on planet Earth is not evenly distributed. Indeed, our country of birth predicts a huge amount of our access to food and technology. 

Although such differences have always existed, they have become dramatically accentuated in the past two centuries. During the early 1800s, the average income of a person living in the richest region of the world was 3 times higher than that of a person living in the poorest region. Today, it is 15 times, or even 100 times higher.*

To understand the human condition today, we have to understand our economic geography. This is the theme of the 2nd part of Oded Galor’s remarkable book, Journey of Humanity (see also episode 12). 

In this 2nd episode on Journey of Humanity, Ilari and Professor Galor discuss topics such as:

• The deep impact of colonialism
• Could Europe have industrialised without oppressing the rest of the world?
• Why are some colonial "spinoffs" rich (e.g. the US) and others are not (e.g. Brazil)?
• Political institutions (e.g. capitalism, liberal democracy), especially the differences between inclusive vs extractive institutions
• How the Black Death transformed Europe.
• How cultural norms are shaped by geography (e.g. the quality of the soil)
• The costs and benefits of a diverse society

The conversation also explores:

• How to use this historical outlook to build a better future: solutions for low- and middle-income countries.
• What to do about the current inequalities within nations?
• Will we survive the 21st century?

Technical terms

• Malthusian trap (where increases in wealth are “eaten away” by increases in population size)
• Human capital (i.e. investment in the skills of the population)
• Extractive vs inclusive institutions (terms popularised in economics by the work of Daron Acemoglu and James Robinson in Why Nations Fail)
• Glorious Revolution and the Bill of Rights in England (1688)
• The middle-income trap (based on the observation that only 14 countries have been able to go from "middle-income" to "high-income" status since 1960. In 2019, these were dominated by the East Asian economies of Japan, South Korea, Singapore, Hong Kong, and Taiwan, but joined by Chile, Cyprus, Greece, Ireland, Malaysia, Malta, Portugal, Seychelles, and Spain [e.g. Lee 2019])

Names

• Kenneth Pomerantz (author of The Great Divergence)
• James II of England, Louis XIV of France, William of Orange
• Karl Marx
• Thomas Piketty

Get in touch

• Feedback? Guest suggestions? Just want to say "hi"? It would be great to hear from you! Feel free to drop a casual line anytime to makela dot ilari at outlook dot com.

* The exact number depends on how we define an "area". The estimates are from Journey of Humanity and are discussed in episode 12.