Mineral wealth is a blessing to rich, well-governed countries. To poor, ill-governed countries, it’s a curse, reinforcing the culture of corruption. Worst of all is mineral wealth in the midst of civil war: it can both finance and motivate insurgency.
So the claimed discovery of a trillion dollars’ worth of minerals in Afghanistan is the opposite of good news. What puzzles me is who in the U.S. government thought it advantageous to get this story out now, and why.
Update Marc Ambinder thinks the Obama Administration is playing Wag the Dog, using the alleged bonanza (which Ambinder says isn’t new news) to distract attention from a failing counter-insurgency effort. Weirdly, Ambinder credits Jared Diamond with the thought that mineral wealth tends to geneate political stability.
Lithium? Admittedly we will need a lot of it for car batteries. But until recently nobody bothered looking for the stuff. As a metal, it isn’t used up by being processed. Saudi Arabia my eye. You’re right that the wealth will probably still be enough to make Afghan politics even worse.
I suspect that, even for wealthy countries, easily extracted mineral wealth is a curse. It’s just a curse that takes longer to kick in, and is tempered a bit.
The essence of the extractive resource curse is that it makes the welfare of government independent of the welfare of the citizenry, by giving government a source of power separate from the productivity of it’s citizens. Because the government doesn’t need the citizens to be productive, and wealthy citizens are harder to control, the government ends up impoverishing it’s population. Because doing so doesn’t impoverish IT, but does put it in a stronger relative position.
Foreign aid channeled through government can do the same thing.
The extractive resource curse is, thus, a useful reminder that government isn’t by it’s nature a benign institution. It’s only benign to the extent that it’s given incentives such that it HAS TO BE benign to prosper. Take away those incentives, or allow it a way to weaken them itself, and things get ugly fast.
The extractive resource curse has another essence, which is that it teaches that it’s most admirable to have wealth without work. Having someone parachute in and pay you royalties while he digs or drills and you do nothing (or for cotton you raise with slaves, or cattle you put out in the spring and sell in the fall after you summer in a nice place) is toxic to culture. As Mark observes, it’s manageable in places where social capital and values were formed by having to work for a living for a few centuries (oil/Norway), but very bad in colonies and places with fragile social foundations (oil/UAE).
Although I agree with the commenters on the curse of mineral wealth (how could I not?), there are a few interesting exceptions.
First is the early Industrial Revolution. Mineral wealth (assuming it didn’t take the form of gold and silver) seemed to help the countries that had it: UK, Germany, France. Especially the UK.
Second, the state of Texas. This is a real puzzler. It’s political culture is Southern enough, so it should have been destroyed by its mineral wealth: worse even than Oklahoma, Wyoming, or Alaska. (Okay, Oklahoma is also kind of Southern.) But Texas is a genuine entrepot. I can’t figure it out. To some extent, it avoided mineral wealth trouble by leveraging its mineral wealth into a global oil extraction industry. And maybe that is the entire story. But why Texas, and why not Pennsylvania? Any downthread responses?
Oh, by the way, Brett, wealthy citizens are easy to control. Why? They run the government for their benefit.
The extractive resource ‘curse’ generally strikes when the resource is such that it can be gotten at without a lot of labor relative to the profit, and especially when the money flows first to government, not the private sector.
During the industrial revolution a large fraction of the gain from mining had to go to the miners and suppliers of equipment, because mining was so crude back then. And the government was generally getting the money second hand. So the wealth was spread through society, instead of being concentrated in the hands of whoever got control of the levers of power. Today some resource is found on the territory of a poor country, the local government claims ownership, signs with a multi-national, and the checks roll in without the locals getting much work out of it, to be used by the ruling faction to cement their rule. Or a gang less nominally legit gets it’s hand on some portable wealth, and uses it to fund a power grab.
It’s not like a sepratist group can secretly drill an oil well in Texas, and smuggle out oil to fund it’s activities…
You want a good candidate for the curse in the US, it would be Alaska, because of the way the oil profits are routed through the state government.
Don’t forget the dutch disease (http://en.wikipedia.org/wiki/Dutch_disease).