In one of the numerous threads, it was asked why so many resource rich African countries are so poor.
Initially, the answer seems like a meaningless tautology... Poor countries are so poor because they are full of poor people... however, it is not.
We discuss a country's wealth, we rarely mean how rich its few richest people are. Rather we look at the average person, or the GDP or some such.
As an example, Mexico has the second highest number of billionaires of any country on earth (behind the USA) and yet they are not considered a rich country because the per household income is $14K and per capita GDP is $10K. Compare to USA with $60K and $50K.
Warning, to understand why Mexico is a "poor country full of poor people" even though it has massive resources, may make you understand why having a high tax rate on the rich (New Deal) allowed America to rapidly grow its middle class, increase GDP and reduce inequality. If you are a Republican, this could either make you question your current economic beliefs, or more likely, reject reality to allow you to preserve your personality that is so tightly intertwined with your beliefs.
The answer is... because all the wealth is owned by a few people. If we look at the economy as a game, creating winners who accumulate wealth and losers that go bankrupt, well then, these "poor countries with lots of resources" are at end-game. The few rich have won, have all the stuff, and everyone else is broke.
The idea of working hard, producing stuff, then selling it, requires that there be another person with money, willing and able to buy. Once there are a few winners and masses of losers, that assumption is false. You work hard, produce stuff, but then either can't sell it or have to sell it for a very low price, because all your customers are broke.
USA was in that condition at the end of the 1800s. We kept falling into recession and depression because there was not enough demand, because too many people were poor and could not buy stuff. Morgan, Rockefeller, Carnegie had "won the game".
First we broke up the monopolies, then we strengthened pro union laws, then we established a common currency and stabilized banking... But, we still kept falling back into depression. We were up against unregulated capitalism's fatal flaw. The ability to use wealth to acquire more wealth, results on almost all the wealth ending up in a few hands. The economy collapses because the masses are too poor to buy much. Little demand, little production.
Finally, we got the New Deal. Government spends a lot of money into the economy, poof, money in the economy. EXCEPT, that new money also didn't stay in the economy. It leaked out of active circulation into the hands of the few rich. It wasn't until we "plugged the leak" that money put into the economy stayed actively circulating in the economy. And what was that plug? 90% top tax rate, that no one paid, because they could capital invest to get deductions... and capital investing puts and keeps money actively flowing in the economy!
So, that is what those poor countries with lots of resources need to do! Get the money out of the hands of the few rich people, and get it actively flowing through the economy, and keep it actively flowing in the economy.
Unfortunately, because money buys election, it is the few rich people that have control, and they have NO INTEREST in giving up their wealth to make their country less poor.
