What Causes Wealth? R. Ream

478 economists and social scientists be ginning with Smith have sought to discover the cause of wealth. An ex amination of the shortcomings of many common explanations for the existence of poverty offers insight into the real cause of prosperity. Overpop.ulation. One popular claim is that poverty exists because of overpopulation. It is said that countries with large populations, such as India, Bangladesh, and the People's Republic of China, suffer from poverty because production cannot possibly be great enough to feed, clothe and house adequately the millions ofpeople. If leaders could only convince their people to prac tice birth control, so the argument goes, the standard of living would begin to rise to a decent level. This explanation has shortcomWHAT CAUSES WEALTH? 479 ings. It ignores the necessity for con sidering the size of the population in relation to the area of a country. For every country of high population density that is impoverished, such as Bangladesh, relatively populous and prosperous Japan, South Korea, Taiwan, the Netherlands, Singapore and Belgium may be cited. And among the sparsely populated coun tries, the prosperous United States may be listed along with some of the poorest countries of Africa. Actual population levels, as well as popu lation densities, fail to explain why some countries are poor and others prosperous.

The poor are ulazy." Another fa miliar argument is that the poor are lazy people with low levels of intel ligence and few natural talents. This line of reasoning often takes on strong racial overtones. It also seems to be inconsistent with a number of basic facts. We have the examples of millions of supposedly inferior people who left impoverished countries, became prosperous and made tremendous scientific, cultural and material con tributions in· their adopted nations. In Wealth and Poverty, author George Gilder coneluded after studying the remarkable achievements of several Lebanese families in the Berk shires: ((Other immigrants in every American city-Cubans in Miami, Portuguese in Providence and New'ark, Filipinos in Seattle, Koreans in Washington, D.C. and New York, Vietnamese in Los Angeles, to men tion the more recent crop-have performed comparable [to the Leba nese] feats of commerce, with little help from banks or government or the profession of economics." He goes on to observe that during the sev enties, ((Ameri.ca underwent one of its prime epochs of immigration, comparable to the great floods of Irish, Italians, and Jews in the nine teenth and early twentieth centu ries. Four hundred thousand legal immigrants a year entered the country along with some eight hun dred thousand undocumented aliens, and everywhere they went they found and created jobs."

The peoples of East and West Ger many have a common ancestry and history, yet one country flourishes while the other strains under eco nomic difficulties. Likewise with the Chinese in Hong Kong and Taiwan, contrasted with their relatives and former countrymen in communist China. Compare the Ivory Coast with its neighbors. Clearly, poor people in general are not less intelligent, less talented, or inherently ill-dis posed toward work; the cause of their poverty is to be found elsewhere. Poor nations lack natural re sources. Another reason people are poor, some analysts contend, is that certain countries are not endowed 480 THE FREEMAN August with the necessary type or the proper quantity of natural resources. It is difficult to sustain this assertion, considering the fact that many of the most resource-rich countries are poverty-stricken, while many wealthy nations are less well-en dowed with resources. Examples of the former include most of the na tions in Africa and South America, while in the latter group of poorly endowed can be found Taiwan, J a pan, and most Western European countries. Even the member nations of OPEC, rich in oil, are unable to build a strong industrial base and raise the standard of living for their people to above average levels. There is more to prosperity than the mere presence of natural resources.