Wealth, Poverty and Politics by Thomas Sowell

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The Book in One Paragraph

There is no single reason that can explain the differences in income and wealth among individuals, races, nations or civilizations. There are countless factors and combinations of factors like geography, culture, social factors, and politics that vary so much from one nation to the next that it would actually be a miracle if somehow income and wealth was equally distributed throughout the world.

Wealth, Poverty and Politics Summary

This is my book summary of Wealth, Poverty and Politics by Thomas Sowell. My notes include quotes, big ideas, and important lessons from the book.

  • Disparities in wealth have existed for thousands of years between countries along with disparities in the underlying things that create wealth (knowledge, skills, habits, discipline) because of differences in geographic, cultural, social and political settings.
  • Differences in wealth and income are due to differences in production. The reason for these differences is often a combination of factors, not just any single isolated factor.
  • When you consider how different geography, culture, politics, and demographics are from one country to the next, it would actually be shocking if every country experienced equal levels of prosperity and progress.
  • It’s mind-boggling just how different regions are geographically around the world. More tornadoes occur in the middle area of the U.S. than the rest of the world combined. Most of the geysers in the world are in Yellowstone National Park.  
  • Highly fertile soil called mollisols are found almost exclusively in temperate zones but are virtually non-existent in the tropics. This made a massive difference during the ages when agriculture was the most important of human economic activities.
  • Isolation is a major contributing factor to poverty. People that have no access to a large network aren’t able to keep up with technological trends and advancements. This is why mountain villages and island communities often lag behind most cities economically.
  • The ability to interact and communicate with other societies has been a massive advantage historically.
  • It has been said that “intellectual force” is something that “feeds upon the nutritious food of wide comparisons”, and regions that are unable to interact with the outside world often advance much slower. The most obvious examples is sub-Saharan Africa. The world’s largest desert, the Sahara desert, is slightly larger than the 48 contiguous U.S. states and it separates sub-Saharan Africa from the rest of the world.
  • Conquest and enslavement have not always lead to long lasting differences in wealth between countries. Consider the Spaniards who conquered civilizations in the Western hemispheres – they gained wealth for a short period but failed to invest it in their own economy or its people and today Spain is one of the poorer countries in Western Europe. As late as 1900, more than half of all people in Spain were illiterate, while most blacks in the U.S. were literate, despite having been free for less than 50 years.
  • “The standard of living of a nation depends more on its output per capita than on the money received as income for producing that output. Otherwise, government could make us all rich, simply by printing more money.”
  • “The real problem of poverty is not a problem of distribution, but of production. The poor are poor not because something is being withheld from them but because, for whatever reason, they are not producing enough.” -Henry Hazlitt
  • Africa lacks good harbors, which limits contacts with overseas cultures.
  • Waterways are a geographic feature that vary significantly throughout the world. They play a vital role – as drinking water for humans and animals, as sources of food like fish, as sources of irrigation for crops, and as transportation arteries for cargo and people.
  • The advent of agriculture is what made cities possible. Without agriculture, dense groups of people couldn’t live in one area.
  • Most industrial, tech, and medical inventions have been made in cities.
  • Waterways have historically played a crucial role in economic development because they used to be the most viable form of transportation over long distances. In 1830 it cost more than $30 to move a ton of cargo 300 miles on land but only $10 to ship it 3,000 miles across the Atlantic. Given the sheer quantity of food, fuel, and other resources that must be imported and exported in and out of cities, it makes since that so many cities around the world have been located in navigable waterways, especially before the transportation revolution within the past 200 years that produced motorized transport on land.
  • Africa is more than twice the size of Europe, yet Europe has a longer coastline because it has so many twists and turns. This makes for good harbors where ships can pull up and drop off supplies easily.
  • “Africa is a dry continent, with many of its rivers not deep enough to carry the large ships with heavy loads that are carried on the rivers of China, Western Europe or the U.S. The average depth of a river is not as important as its minimum depth on the route of a given vessel’s journey, which is what determines how far a boat or ship can go.”
  • Many of Africa’s rivers flow from high altitude to low, which creates many waterfalls and is nearly impossible for ships to travel through. 
  • Rainfall varies significantly between seasons in tropical Africa, which means rivers dry up or overflow during different seasons, which makes transportation hard.
  • The Amazon river is the largest river in the world in terms of volume of water, yet the soil in the region where it flows is poor quality, which is why no economic development has occurred in the region.
  • Waterways are advantageous for some countries, but not others. This has a huge economic impact.
  • All major rivers start in mountains where moisture-laden winds hit mountain slopes, rise upwards into cooler air where they lose the ability to carry water, then eventually turn to rain and snow. This water makes its way down the mountain and forms streams and eventually rivers. Tropical Africa lacks a major mountain range, which is why it doesn’t have consistent streams from mountains to provide water during dry seasons, which causes rivers to dry up when it gets hot. By contrast, the Sierra Nevada mountains in Spain and the Taurus mountains in Turkey supply water that makes irrigated agriculture possible in the lowlands year-round when there isn’t sufficient rainfall.
  • Agriculture originated somewhere between the Tigris and Euphrates rivers in what is today Iraq. This was arguably the most important economic innovation ever.
  • Large animals like horses and oxen were crucial during early economic development to carry large weights across land. Due to the tsetse fly in sub-Saharan Africa, most large animals got diseases and couldn’t thrive in that region. This is yet another factor that put Africa at a disadvantage economically.
  • Although Africa’s population is 1.5 times larger than Europe, Africa has nine times as many languages, which makes it a separated country linguistically.
  • Location plays a huge role in economic development too. The U.S. has two huge oceans on each side of it, which has prevented world wars from occurring on its turf. Likewise, the English Channel has rough, choppy water, which prevented armies from crossing the channel to conquer Britain. 
  • Culture makes a difference in wealth and income as well. For example, Chinese, Jewish, and Lebanese immigrants have historically had a strong work ethic, which has allowed them to rise from poverty to the upper class historically, no matter which countries they immigrate to.
  • Attitude towards education, fields of education, and work ethic all form a culture. For example, the south in the U.S. had an abundance of natural resources but consistently produced less than the northern states because it had a laid back, lazy culture and was slow to adopt new technology. 
  • Russia is another example – they’re overflowing with natural resources but due to widespread corruption and inefficient economic processes, they have been unable to harvest those natural resources to get ahead economically. Japan, by contrast, has very few natural resources, yet has been able to thrive economically due to a strong work ethic and willingness to adopt to modern technology and innovations.
  • It’s silly to say that someone who has become wealthy did so because they were greedy. Just because they may have wanted wealth doesn’t mean that people just forked over money to them. To earn extreme wealth, one must provide a ton of value to a ton of people so that they’ll pay you money for some product or service you create.
  • Due to differences in culture, geography, natural resources, politics, social trends, and a host of other factors, it is no wonder that economic differences exist.
  • Despite income inequality increasing in recent centuries, the overall quality of life for people at every income level has increased notably. Even the poorest in society today live better than kings did just 200 years ago.

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