One of the biggest problems in the Third World is corruption. Why some people imagine that Third World bureaucrats who are rebadged as “international civil servants” suddenly become a different species escapes me. However, corruption in the Third World could not exist, at least in its present form, unless the First World existed. Where do the African ministers and their wives shop? Why in France of course. And where do their children study? In Britain, the UK and such places. And who handles their money? A first world bank; or maybe a bank in Russia but based upon securities traded in real capital markets.

If Robert Mugabe were faced with simultaneous realizations: a) that nobody recognized his signature, including his Swiss banker; and b) he would have to live out the rest of his life in Zimbabwe do you think it would affect his behavior? I’ll bet it would. In the old days it was customary for a captain to share the fate of his ship. The underlying rationale for this conjoining of the fates was to eliminate the agency problem. Since their fates were one, the captain would do everything in his power to save the ship. There was no bailout option. On most scheduled multiengine passenger flights, the flight crew doesn’t have the option of choosing a fate distinct from their passengers. We can apply the same principle to the Third World. We should want every poor country to prosper. But to achieve this, we should adjust the incentives of their leaders so that it is in their own interest to build up their countries rather than to loot them, move to New York and then damn America.