Jeremy Williams in his latest blog reviews Collier’a 2010 book which he sums up with the two formulae emboldened below. Neither Williams nor Collier point to the limits to growth that human exploitation of the earth have already exceeded, but the formulae highlight the consequences of unregulated greed and corruption that deserve the term ‘plunder’ that rob both the earth and the ‘bottom billion’ of a flourishing future:
“Collier is an Oxford professor, a former World Bank economist and a development specialist. He has a knack for articulating a problem in a memorable way, drawing attention to the most salient points. He did that with the concept of the bottom billion, and with his explanation of poverty traps. In this book, he sums up his central message with two formulae:
nature + technology + regulation = prosperity
As far as Collier is concerned, the world’s poorest countries have “one lifeline: nature.” It is their natural resources that will lead them to prosperity, and “the failure to harness natural capital is the single most important missed opportunity in economic development”. The potential income from natural resources far outweighs any contribution from aid, and the economic boost can then be used to invest and drive development. That all depends on using resources well, and ensuring that the benefits are shared. And there’s the rub, because the second formula is this:
nature + technology – regulation = plunder
Too often, a poor country sees its natural resources extracted without any obvious benefit to the economy as a whole. The value of them goes into the pockets of the elite, or into the Swiss bank accounts of corrupt politicians. Wealth is siphoned out of the country through the black market, or through global corporations who have negotiated good deals for themselves. When that happens, those resources have been plundered. It’s an evocative and piratical word, but Collier insists that “plunder is, at its root, an economic concept – the abrogation of property rights.”
In order to avoid plunder, we need to know who has a claim on natural resources, whether that is oil or minerals, or timber or fish. The book discusses the ethics of ownership at length, arguing that a nation’s one-off resource stocks should be held as commonly owned, and their value captured for society. That means exploiting them in a way that benefits everybody, taxing them correctly, and using the proceeds well. Don’t blow the benefits of a one-off resource on day-to-day spending, he cautions. Invest it for the future.
There’s a lot of good advice here for countries that are making resource discoveries. Policy makers in such places could learn a lot from the book, and so could ordinary citizens, keeping their governments accountable and making sure that those resources serve as a stepping stone to further development”.