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for survival in the less productive lands and waters of the Mediter-
ranean, and a power of endurance and persistence born of the
same circumstances. The ability of Italian immigrants to endure
poor and cramped living conditions and to save out of very low
wages, which caused comment among those around them,
whether in other European countries or in the Western Hemi-
sphere or Australia, had both geographical and historical roots.
Similar characteristics have marked various other Mediterranean
peoples, but the Italians are a particularly revealing example be-
cause they include not only the Mediterranean people of the south
but also people from the industrial world of the Po River valley in
the north, whose geographical, economic, and cultural characteris-
tics are much more similar to those found among Northern and
Western Europeans. Northern and southern Italians have long
differed economically and socially, not only in Italy, but also in
Australia, the United States, and Argentina.
The enduring consequences of the different skills and experi-
ences possessed by people from different parts of Europe can be
seen in the fact that the average income of immigrants from
Southern and Eastern Europe to the United States in the early
twentieth century was equal to what was earned by the bottom 15
percent among immigrants from England, Scotland, Holland, or
Norway. Illiteracy was higher among immigrants from Southern
and Eastern Europe. In school, their children tended to lag behind
the children of either native-born Americans or the children of
immigrants from Northern and Western Europe, while their I.Q.
scores were often very similar to those of American blacks, and
were sometimes lower.
212 APPLIED ECONOMICS


Nor was all this peculiar to American society. In pre-World War
II Australia, immigrants from southern Italy, Dalmatia, Macedo-
nia, and the Greek countryside were typically illiterate and spoke
primarily their local dialects, rather than the official languages of
their respective home countries. More than three quarters of these
Southern European immigrants to Australia were from the rugged
hills or mountains, the steep coastlines or islands of the region,
rather than from the urban areas or plains. Although these remote
areas were eventually drawn into the modern world, the skills of
their peoples continued to lag behind the skills of peoples in other
parts of Europe that were more industrially advanced and this was
reflected in their earnings in Australia, as in the United States. As
late as the 1970s, the median earnings of immigrants to Australia
from Greece, Italy, or Yugoslavia fell below the earnings of immi-
grants from West Germany or from English-speaking countries.
Southern Europeans in Australia remained under-represented in
professional and technical occupations, and from nearly half
among the Italian immigrants to an absolute majority among the
Greek and Yugoslavian immigrants were unskilled laborers. These
patterns were not simply a result of such subjective factors as oth-
ers' stereotypes, perceptions, or racism, but in fact reflected histori-
cal realities, however much additional penumbra of prejudice may
have developed around those realities, or remained resistant to
change after the realities themselves began to change with the as-
similation and rising skill levels of the newcomers.
In addition to the effect of climate on the flow of water”freez-
ing rivers in Russia during the winter and the drying up of rivers in
tropical Africa after the rainy season is over”it has long had a ma-
jor direct effect on agriculture. Moreover, agriculture has been the
place where the vast majority of the peoples of the world have
worked throughout almost all of history. Even countries that are
heavily industrial and commercial today were primarily agricul-
The Economic Development of Nations 213


tural until recent centuries. In the United States, for example, it
was 1920 before more than half the American population lived in
cities.
Temperature and rainfall determine what crops can be grown
where. In extreme cases, they determine that no crops at all can be
grown, as in deserts and in places where the land is frozen year
around, such as in parts of Siberia. In places where moisture-laden
air blows across a mountain range, it is not uncommon for the
rainfall on the side where the moisture originates to be several
times as great as in the "rain shadow" on the other side of the
mountains, where the air goes after it has lost most of its moisture
while rising over the crests. On some western slopes of southern
Italy's Apennines Mountains, for example, the annual rainfall
reaches 2,000 millimeters while parts of the eastern slopes get as
little as 300-500 millimeters. Similarly, in the American Pacific
Northwest, precipitation on parts of the west side of the Cascade
Mountains averages up to ten times as much as on parts of the
Columbia Plateau to the east. Obviously the agricultural possibili-
ties presented to the people living on one side of the mountain
range differ greatly from those presented to people living on the
other side. They must grow different crops and acquire different
skills and experiences while doing so.
Climate also affects the diffusion of knowledge and experience.
Because climate tends to vary less from east to west than it does
from north to south, knowledge of particular crops and animals
that flourish in a particular climate likewise spread more readily
from east to west than from north to south. Thus the cultivation
of rice spread from China all the way across the Eurasian land
mass into Europe, while the cultivation of bananas could not
spread from Central America into Canada, even though that is a
shorter distance, because the climate differs so much between
Central America and Canada. The same goes for the domestica-
214 APPLIED ECONOMICS


tion or hunting of animals peculiar to a particular climate. The
knowledge of such things likewise spreads more readily from east
to west, than it did from north to south. Nor could knowledge of
the crops, flora and fauna in the temperate zone of South America
diffuse smoothly to the temperate zone of North America, because
many of the techniques and practices could not spread through the
vast tropical regions between these two temperate zones. Very dif-
ferent plants and animals existed in the tropics, so that much of the
knowledge and many of the techniques from the temperate zones
could not be applied in the tropics, and therefore could not be
transmitted through the tropics to temperate zones on the other
side.
Temperature is, of course, not the only aspect of climate. Rainfall
is another. Knowledge and techniques of agriculture that apply in a
wet climate may not all be usable in arid regions. Therefore differ-
ences in rainfall patterns can produce cultural isolation as regards
agricultural techniques, just as natural barriers like mountains or
deserts can produce cultural isolation in general. Those isolated
climatically have likewise been unable to draw upon the knowl-
edge and experience of peoples in similar climates elsewhere, when
there have been hundred or thousands of miles of very different
climate patterns in between.
During the many centuries when ships were moved on the seas
by the power of the wind in their sails, knowledge of particular
wind patterns and ocean currents in particular regions of the world
was crucial to the ability to carry on trade among different soci-
eties. Much of this knowledge was as localized as knowledge of the
plants and animals peculiar to particular geographic settings.
Knowledge of sailing in general was not enough when trying to
sail off the west coast of Africa, for example, in places where it was
easy for Europeans to use the wind and currents in that region to
get in but hard to use them to get back out again. Conversely,
The Economic Development of Nations 215

sailors familiar with the monsoon winds of Asia could sail west-
ward as far as Africa during the times of the year when those
winds were blowing in that direction, and then return home later,
after the time came for the winds to shift direction and begin
blowing eastward.
Like other special knowledge of local or regional conditions,
knowledge of wind patterns and ocean currents, and the tech-
niques developed to deal with these localized patterns, tended to
be confined to those living in the area. Put differently, various re-
gions tended to develop different knowledge and techniques.
Thus, for example, those countries which became leading seafar-
ing nations and naval powers in the Mediterranean during the
Middle Ages were not able to play the same role in the later era of
trade and warfare in the Atlantic, where the waters were much
rougher, and the wind and weather conditions more severe. Those
nations which had been the leading naval powers in Europe in the
earlier era, when the Mediterranean was the principal avenue of
waterborne commerce and naval warfare, were unable to match
the upstart Atlantic naval powers when the central theater of trade
and warfare shifted to the Atlantic after the Europeans discovered
the Western Hemisphere.


POPULATION

Some of the worst poverty in the world today can be found in
thinly-populated regions like sub-Saharan Africa. Meanwhile,
population density is several times higher in much more prosper-
ous Japan. There are also densely populated poor countries, such
as Bangladesh, but there are even more densely populated places
like Switzerland and Singapore, with far higher standards of liv-
ing. The United States and Tanzania have very similar population
densities, but radically different economic levels. Clearly, there are
216 APPLIED ECONOMICS


other factors that have much more to do with prosperity than pop-
ulation does. Indeed, a case can be made for many regions of the
world that it is precisely the thinly spread population which makes
it so expensive to provide electricity, sewage lines, and medical care
that many of these people are often without such things.
In some ultimate sense, there must of course be a limit to the
earth's capacity to sustain human life. But there are ultimate limits
to many things”perhaps all things”and yet that provides little or
no practical guidance as to how close we are to those limits or what
the consequences are of various alternatives today. There are ulti-
mate limits to how fast a given automobile will go, and yet we may
drive it for years without ever reaching even half of that ultimate
speed, because there are much narrower limits to how fast we can
drive safely through city streets or even on highways. As a young
man, John Stuart Mill brooded over the fact that there was an ulti-
mate limit to the amount of music that could be produced by using
the eight notes of the musical scale. But, at that time, Brahms and
Tchaikovsky had not yet been born nor jazz yet conceived, and
rock music was more than a century away. Ultimate limits alone
tell us virtually nothing useful about whether there is or is not a
practical problem.
If we were in fact approaching those ultimate limits, whether in
food supply, natural resources, or other necessities of life, their
rising prices would not only inform us, but force us to change
course, without public exhortations or politically-imposed limita-
tions. Indeed, many political solutions are as inconsistent as they
are counterproductive. For example, there are restrictions on the
use of water by the general public, imposed by the same political
authorities who supply water below cost to farmers. These farmers
consequently grow crops requiring huge amounts of water from
costly government irrigation projects in the California desert,
instead of leaving such crops to be grown in the rainy regions of
The Economic Development of Nations 217

the world, where ample water is supplied free from the clouds.
Although the water is costly to the government”which is to say,
the taxpayers”it is cheap to the farmers, and is used as if it were
abundant.
Food shortages and famines have sometimes been used as evi-
dence that population has outgrown the food supply. But hunger
and starvation in modern times have almost always reflected local
problems such as crop failures in a given area, combined with dif-
ficulties in getting enough food into the stricken region fast
enough to prevent death from either malnutrition or diseases to
which the people have been made vulnerable by malnutrition.
In some very poor countries, the roads and other infrastructure
are not sufficiently developed to carry vast amounts of food to
widely scattered people with the urgency that is needed. All too
often, in both poor and more affluent countries, the famines have
resulted from human error or malice or military operations that
disrupt food distribution systems. During the First World War,
for example, the Allied naval blockade prevented food from reach-
ing many in central Europe:

Germans were forced to eat their dogs and cats (the latter came to
be known as "roof rabbits") as well as bread made from potato peels
and sawdust. Civilian deaths by starvation climbed to hundreds of
thousands per year.


None of this had anything to do with overpopulation. Neither
did the man-made famine in the Ukraine in the 1930s, which
took millions of lives, and which Josef Stalin used to break the
back of resistance to his regime.
"Overpopulation" theories do not stand up well to empirical
scrutiny. But they do not have to. They have in fact remained
popular for more than two centuries, in the face of large and
218 APPLIED ECONOMICS

growing evidence of their falsity. Even within Malthus' own life-
time, his prediction that growing numbers of people tended to
cause their standard of living to be reduced was falsified by em-
pirical evidence of rising population and rising living standards
occurring simultaneously. That has continued to be the general
pattern ever since. Wars, natural disasters, and other local disrup-
tions of food supplies have caused famines from time to time in
various places around the world, though less so than in centuries
past, when the world's population was a fraction of what it is to-
day. Indeed, obesity and a search for export markets for agricul-
tural surpluses are problems for a growing number of countries
today.
Even in a poverty-stricken country like India, the number of
people has been nowhere close to what the land could support. A
twentieth century study found:

Half the population of India lives on less than a quarter of the total
available land, and one-sixth is concentrated on less than 6 percent
of the land. At the other extreme, vast areas continue to be almost
uninhabited.

Photographs of crowded cities in Third World countries may
create the impression that there is not enough room for the popu-
lations of these countries and that this somehow accounts for their
poverty. However, crowding is what cities are all about, whether in
poor countries or in rich countries. Park Avenue has more people
per square mile than in many Third World villages or urban slums.
Crowding lowers the cost per person of supplying everything from
electricity to running water to sewage lines, movie theaters and
ambulance services. That is why there have been crowded cities in

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