Calexis

The Mischel Marshmallow Test is a great way to determine if a child has developed self control.  With self control, a person has a much greater possibility for success in almost all facets of their life.  Self control allows a person to forego immediate gratification and make the longer play for greater rewards.

The self control required to wait for the second marshmallow also requires trust.  You have to trust that the experimenter will return to provide the second marshmallow.  In the same way, planning for the future requires trust in a social contract – like believing that university will pay off if you sacrifice the short term for the long term.

Societies without that social contract and trust have a harder time raising their people to improved states.  According to the Peruvian economist Hernando de Soto in The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else, the existence of a reliable social and legal infrastructure can create wealth.

For example, the legal and monetary structure and dependability of property rights allow people to raise capital that can then be employed to transform societies.  With that foundation, one can develop trust in economic values.  That trust doesn’t exist in many societies that struggle and fail to progress.  And when it is broken and there is no confidence in the social infrastructure.

There are many countries where the smart money goes offshore to protect against currency and legal volatility.  The destination is one of the reasons why real estate values in Canada have skyrocketed in tandem with economic growth in mainland China.  Chinese money is looking for a safer haven.  Canada offers a more reliable and predictable social infrastructure where there are no sudden changes and you won’t get blind sided.

The same is true for people, without access to capital or trust.   It is extraordinarily difficult to succeed.  A recent study by USAFacts, a venture headed by Steve Ballmer, showed that starting life in the US in the lowest economic echelon meant there was a 26% chance you would stay there.  So much for the land of opportunity.

Every developed nation in the world at one time went through the transformation from predominantly informal, extralegal ownership to a formal, unified legal property system. We may have forgotten that creating this system is also what allowed people everywhere to leverage property into wealth.

But it requires both self control – a longer view - and a social structure that permits the economic movement of individuals upward.  Repressive regimes that suppress ethnic groups by creating hurdles for these groups, hurt themselves. They make everyone play for the first marshmallow only.  And there is no successful long term future in that.

  • Share/Bookmark

Leave a Reply

Powered by WordPress.
Calotropis theme by itx