Extraction Economies and politics
What makes Western Democracies profitable and Central American Countries poor? Their stock markets …. right?
When I stayed in a small fishing village in the Mexican Baja, the police decided to station several officers into the town. The townspeople were skeptical at best. After 2 months of paying bribes for protection and increased crime against those who refused, the mayor kicked the police out. Calm returned. I saw this in Jamaica where gangs controlled who could enter the hospital and who could sit in the market. I was told that to make money you had to earn enough to live on, but not enough to attract the attention of the gangs or the tax collectors. In Tanzania, police would perform traffic stops where our lucrative bus drivers would run back and pay the ‘transportation fee’ only to get stopped again in 2 miles. The drivers complained that they were making too much money to be ignored. Many places in Central America has this kind of economy where anyone with a noticeable paycheck gets targeted by gangs or a family that extracts as much wealth as they can..
This is called an extractive economy. And it is common. North Korea, Venezuela, Nicaragua, Guatemala, and … Russia… Hungary… United Emirates… are some of the world-wide examples, The economy only functions for the elite and not for the average citizen and the system is difficult to change. Judicial decisions are bribed and the law enforcement is part of the problem. The average person can not start a business, create banks, get loans or generally get ahead. It is like a monopoly game in which someone has already won, but the players can’t just quit the game. Unless- they immigrate to a country that does not have an extractive economy and a political agenda of extraction. This is why we see immigration from extractive economies.
Extraction Economies are Poor. The middle class is absent because the average person can not get ahead. There is no ‘flow of money’ through the economy as there are dangers to becoming too wealthy. These systems rot from within like a vegetable.
Inclusive Democracies and Economies
The US and the Western economies, on the other hand, historically have economies that thrive with the hope that everyone gets a chance at earning a piece of the pie with fair rules to play by. We can get loans, open bank accounts, increase our net worth without a ruling family or gang stealing it away. Generally these political systems have a functioning and nonpolitical judicial system that ensures financial laws are obeyed and that no governing entity can violate the the constitution and citizen’s rights. . These countries have robust nonpartisan federal statesmen supporting the government programs designed as guardians against corruption. Most importantly these countries have a dynamic middle class with the voting clout and will to anchor this ideal politically and contribute to it and stabilize it economically.
These are inclusive democracies and economies. Various countries and people trust it to be fair and impartial - making it a valuable asset and lucrative. These economies grow wealthy. Money flows through it without pooling into the wealthy elite and powerful families or gangs. Citizens can participate openly and rules are fair and enshrined.
We should be proud of our success. But…. Are we still where we were 10 years ago? Do we still have that impartial judicial system that is key to an inclusive democracy and economy? Can we really say this Supreme Court is impartial with the supermajority of conservatives that have been stacked inside their halls? Many justices openly admit to accepting tickets to events and attending fundraisers with travel payed for….. OK- let us just call it new-fashioned bribery - because it is. So where are we now?
We should be proud of our accomplishment. But… Do we still have a robust nonpartisan Federal workforce guarding the fair rules and anticorruption markers, or are they required to swear an allegiance to a commander and family? Has the Federal workforce been replaced and eliminated? Where are we now?
We should be happy that our Stockmarket is free and strong. But… Where is that dynamic middle class required to anchor the inclusive ideal? They have clearly been shrinking in size, political power and monetary influence. Is money now flowing freely or is it stagnating in the offshore safe-havens of the wealthy few, the corporations and the politically connected.?
The middle class knows this. Our paycheck disappear to the power company and banks for mortgages and rent… to giant medical corporations and credit companies. Every dime gets extracted - leaving the system weaker and used up. We can not get ahead anymore. We feel like we playing the end of a Monopoly game, and sorry to say - we are not the winner.
The reason we feel like we can not get ahead is that we are, more and more, in an extraction economy.
Concrete examples of this are the pharmaceutical industry in which large and powerful BPMs are allowed to impose insane prices for necessary medications because they have equally powerful lobbyists and funds for political campaigns. They extort those who oppose them in the industry and extract money from the vulnerable.. And then there is the semiautomatic weapons and gun industry that we are powerless to regulate despite the threats in our childrens’ schools. The oil companies which cut EPA rules designed to keep us safe. The medical industry that seems, like many industries currently, designed to deliberately extract every dime out of us that they can find - weakening the medical system. These may look differently than the gangs or ruling families in extraction economies but do not let that fool you. They are playing the same game. Our system is failing it’s citizens...
We know this. And if we do not, our kids see it with their inability to buy a house and healthcare. It is why the young professionals are moving in record numbers to countries that have a political system and economy which is fair, backed by the judicial branch and protected by the middle classes. Do you remember our parent’s economy? Do you remember when we could go to college on a part-time salary at minimum wage? Do you remember how we could afford to see a doctor when we needed to?
The angst of the rural people and middle class is that we know and feel that we are migrating from our inclusive economic system into an extractive economy and an extractive political system.
We need a third party to start the change back.