= The incentives facing gov -> result in very different ways of doing what they are suppose to do + Ex: After banks were nationalized in India, debts rose +> this was not simply a matter of transferring ownership of an enterprise to the government -> incentives and constraints were changed again after India began to allow private banks to operate. - For example, in the United States, laws encouraged banks to give ‘subprime’ loans, which led to the disaster of the 2007-2008 mortgage crisis. Similarly, in India in the late ‘60s, nationalizing banks led to loans being made only to the rich, though they were called the "deserving poor’. ~The problem is that this fact is not always recognized when people look to government to right, wrongs and fulfil desires to an extent that may not always be possible + Elected officials are not incentivized by fallure in their policies. If policies fall, politicians are more likely to blame other factors than themselves and their platform, Thus, if they are able to successfully pass the blame (and in many cases they do), they can stay in office never having truly leamed a thing (except how to attack the opposition to stay elected). Tax payers pay things - On the other hand, the incentive of markets is to admit failure and reverse quickly. If you don't, your business will very quickly become uncompetitive and bankrupt. And so, the two processes often produce very different results, even in similar situations (like the banking example above). = When proposals for new ventures are made in these different sectors, proposals made by gov need only persuade ppl but in a market = proposals must convince those ppl whose own money is at stake and who therefore have every incentive to fight for best available option Chapter 23: Intern: Wealth nal Disparities ~The fist thing to recognize is that wealth disparities between nations have always existed, and those disparites are often quite vast, wth some nations having less than a fifth or even a tenth of the GDP of other nations = Alot of energy often goes into finding out why such disparities exist. With tha, there have been a number of diferent factors that were found to cause these disparities. Geographic Factors = No single county exists that has the exact same geography as another. + In regards to growing food, things like the soil composition (fertile /x), rate of rainfall (the amountis different ‘and the amount that land absorbs and holds water = different), amount of sunight (longer / shorter or abundant sunshine (evaporates more water), and other fundamental things vary vastly around the world = So there was no way that this activity could produce similar econamie results everywhere + The effect of different geographic factors such as sunshine and rain, cannot be considered in isolation, because their interactions are crucial and their timing is crucial. = Also, natural resources Ike iron, petroleum, -> not concentrated in one place /its spread over the planet Navigable Waterways+ Among the economic reasons for mast cties located on waterways are transportation costs. = Since water transport is generally historically cheaper than land transport = Of course, rivers and waterways are certainly not evenly distributed around the world, and different places ‘round the world have differences in haw much these waterways penetrate the main continents. ~The navigabilty of rivers is limited by the shape of the lands through which they flow = Factors lke changes in elevation as the water goes to the sea will hinder or help things lke transportation = Additionally, in comparing Europe to Africa, though Arica has a much larger landmass, its coastline is shorter than Europe, simply because the coastlines of Europe twist and turn more, and thus creating more ‘opportunity for harbors and such. Even in comparing Wester Europe to Eastem Europe, there are diferences in temperatures and climates, thus giving Westem Europe more flow and time in favorable = When one considers the depths of rivers, there are stil more inequalities that are economically relevant (ex: nile river > longest but its depth was not great enough forthe large ships to travel) = China = had navigable waterways that helped in the country’s development + Japan = they had smaller and steeper rivers -> was for centuries a poor and underdeveloped country before itbegan = They also lacked natural resources and networks of navigable rivers lacked geographical advantages) so this enabled China and later Westem Europe to become the most technologically / economically advanced region of the world. = Rivers can also supply the drinking water necessary to sustain both human and animal life / as well as the Water needed for farming / ves food directly Ike fish Mountain ~ Like waterways, ithad both direct economic effects on people's lives and effects on how those ppl themselves developed + Mountains also have effects on economics and livelhood. Those in lowlands usually form communities that are interdependent on each other, while those in highlands or mountainous regions are more likely isolated. This gives lowlands easier transportation, and thus more cultural sharing, which resulted in faster technological advancement. = Pplliving in isolated mountain settings have never had the same opportunities for elther economic prosperity or self-develapment as peoples living in those “gentle environments - What mountains often create are cultural “slands" on land, where people in one mountain valley have had Title communication with people living in other mountain valleys = The poverty of many mountain peoples has often led them to put their children to work at an early age, depriving them of education that could atleast break through their physical isolation forthe rest ofthe world= But mountains have a positive effect in that they supply lowlands with water. While the non-mountainous plains of Africa have resulted in dependency on seasonal rainfall, areas with greater mountain features often ‘beneft from being able to exploit waterways which are fed by mountain runof Animals, = The avallabilty of certain animals has also affected economies. Prior to the discovery of the Westem Hemisphere by Wester Europeans, there was a lack of horses, oxen, and other beasts of burden. = They had to carry things for trading goods = The lack of such resulted in a dearth of technological development for the indigenous people of North and ‘South America, despite their geographic similarity to Westem Europe = Infact, such a difference in development of cvlization meant that those in North America often had no ‘contact with their counterparts in South America, in contrast to the massive trade networks and frequent contact between those in Europe, Africa, and Asia. + Similarly, those indigenous to Australia had litle contact with those outside, and indeed didn't have the billy to farm as the soil of Australia has low fertility. While Australia has other natural resources in great abundance, such resources weren't utlzed untl after the British had colonized it Location = Itcan affect the fate of whole peoples and nations, even aside from the particular geographic characteristics, (of a particular location = Difference in location can also mean diferences in climate that affect how much a particular waterway is. subject to being frozen, and therefore unable to carry any cargo = Although Volga (economically important river) / there are two other rivers that have much more water, But since Volga is located near centers of population, and the others are not, there should be a difference. + Allof these geographic features play into how agriculture grew and expanded as humanity matured, and the places where agriculture was adopted faster produced cites that resulted in greater philosophy, literature, ‘mathematics, and other intelectual (as wel as technological) developments, But because geography is so diverse, i's diffcul to locate a singular feature to blame for intemational disparities.