Ted Boettner over at the West Virginia Center for Budget and Policy pointed out a commentary called “From Resource Curse to Blessing,” by Joseph E. Stiglitz, a Nobel laureate in economics. For those not familiar with the term “resource curse,” there’s actually a decent tutorial about it on Wikipedia.
I’m wondering if there aren’t some things in here that everyone — regardless of where they stand on mountaintop removal, or climate change, or the ongoing coal debate — might agree sound a bit like West Virginia. For example:
— … Resource-rich countries often do not pursue sustainable growth strategies.
— They fail to recognize that if they do not reinvest their resource wealth into productive investments above ground, they are actually becoming poorer.
— Political dysfunction exacerbates the problem, as conflict over access to resource rents gives rise to corrupt and undemocratic governments.
If so, the commentary talks about some potential solutions that West Virginians could consider:
First, these countries must do more to ensure that their citizens get the full value of the resources. There is an unavoidable conflict of interest between (usually foreign) natural-resource companies and host countries: the former want to minimize what they pay, while the latter need to maximize it. Well designed, competitive, transparent auctions can generate much more revenue than sweetheart deals. Contracts, too, should be transparent, and should ensure that if prices soar – as they have repeatedly – the windfall gain does not go only to the company.
An example: The sort of “future fund” that Ted Boettner and his group have been advocating. Dr. Stiglitz concludes:
Resources should be a blessing, not a curse. They can be, but it will not happen on its own. And it will not happen easily.