Have you ever noticed that it’s always the same acquaintances that have money problems and have repeatedly asked you to lend them some money? And conversely, that it’s always the same people that never have money problems and never ask you to lend them money? Have you asked yourself what the cause of this phenomenon is?
Through the years, I have watched this happen in my own circle of friends and have seen it happen in other groups of people. I have noticed that whether someone is likely to frequently run out of money is mostly due to that person’s habits and lifestyle.
If you’re a person who is disciplined, inclined to follow rules and plans for the future, you have less of a chance to get into financial or legal trouble than someone who is undisciplined, lenient and has a carpe diem attitude.
What goes for people also goes for companies, because companies consist of people who bring their attitude with them to work. A disciplined workforce makes a company function better than an undisciplined one. And good bookkeeping practices and accounting conservatism makes a company less likely to go bankrupt, while the risk of fraud and bankruptcy is increased in an undisciplined accounting environment.
What goes for people and companies also goes for countries, because the economy of a country is largely formed by its people and companies.
The culture of a country is made up of the religion, habits and lifestyle of its people. It is logical that countries with a relatively more disciplined culture will have a better functioning economy and less corruption than countries with a less disciplined culture.
This principle manifested itself for example in the European debt crisis of 2008-2009. In this crisis it became evident that Northern European countries (except for Ireland) have better and more resilient economies than Southern European countries.
The countries that turned out to have the weakest economies in this crisis were Portugal, Italy, Ireland, Greece and Spain. These are all countries with either Catholic or Orthodox heritage. The countries that performed much better economically during this debt crisis all have a largely Protestant or reformed Protestant culture.
Max Weber, who is arguably regarded as the foremost social theorist of the twentieth century, attributed the success of Northern Europe (and the Anglophone settler colonies) to the self–discipline and future–orientedness that are central to Protestant culture and Calvinism.
That is why I think that the culture of a country is a very important factor in the prosperity of a country (except in oil states, for obvious reasons).
I don’t think the culture of a country is the only cause of poverty in a country. Of course there are other aspects that play a role in keeping a country poor, like lack of fair trade and war.
But often factors like climate change, debt and corruption are also pointed to as causes of poverty. I, however, disagree with the notion that these factors are in themselves main causes of poverty. First of all, there was already poverty in Third World countries before climate change had a major impact on these countries. And debt and corruption are related to culture and therefore not separate issues.
Since 1960, rich countries have sent trillions of dollars and hundreds of thousands of humanitarian aid workers to Third World countries. Yet after more than 6 decades of all that help, there are still more than a hundred poor countries in the world.
So clearly foreign aid has not been a great success. But if the culture of those poor countries is the main cause of their poverty, that would explain that lack of success, because the foreign aid hasn’t changed their culture.
So unless poor countries change certain aspects of their culture that are crucial to enhancing their economy, they will not be able to make the change they have to make to get out of their economic predicament.
Unfortunately, people’s basic attitudes and habits are very hard to change. That takes a long time. So do I think that Africa and South America will be prosperous continents one day? I certainly hope so. I think one day they may be. But not this century.