Astral Codex Ten

Ecuador

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Ecuador

Article

Ecuador is a recurring place in the Astral Codex Ten archive, appearing 6 times across 6 issues between May 19, 2023 and April 30, 2025. The archive places it in contexts such as “or Ecuador and the Soviet Union”; “Columbia versus Ecuador and Peru”; ""Venezuela, Bolivia, and Ecuador have also done this"". It most often appears alongside China, Saudi Arabia, United States.

Metadata

  • Category: Places
  • Mention count: 6
  • Issue count: 6
  • First seen: May 19, 2023
  • Last seen: April 30, 2025

Appears In

Source Context

Recovered passages from the original issue text. When the raw archive preserved outbound links inside the source passage, they are listed directly under the quote.

The Question Of Separatism
May 19, 2023 · Original source
Of course, nations are an economically important concept because of that one property: they are sovereign, and therefore they write laws and implement policies that affect the economy. These policies can be productively compared. But that’s about it — for everything else, nations aren’t the right way to think about wealth. One reason is simply that they’re very different from one another: “it affronts common sense,” Jacobs writes, “to think of units as disparate as, say, Singapore and the United States, or Ecuador and the Soviet Union, or the Netherlands and Canada, as economic common denominators.” I would add that countries are arbitrary and changing: when the Soviet Union was replaced by 15 sovereign countries, the economic reality didn’t suddenly reshape itself to match the new borders. Lastly, nations contain, under the hood, many sub-economies that are also highly different from one another. None of that is secret or forbidden knowledge. Everyone has always been aware that New York City, or Milan, are economically very different from rural Mississippi or Sicily. But I find that it’s far easier to think in terms of “the United States” or “Italy,” especially when you’re not from there. Nations are an abstraction of real-life complexity, and are accordingly very tempting to use. Also, they’re often the entities that collect statistics, which is another difficult-to-resist temptation for anyone who likes quantitative data. Cities as Radiators of Economic Forces If nations aren’t the best unit to analyze the economy, what is? This is a Jane Jacobs book, so the answer is obviously going to be cities. Jacobs doesn’t actually give a clear argument why. Maybe that was in her previous book, The Economy of Cities. So far as I can see, her reasoning is, ironically, a bit tautological: “all developing economic life depends on city economies; it depends on them by definition because, wherever economic life is developing, the very process itself creates cities and has probably always done so.” But so far as I can see, this reasoning is correct. Cities concentrate people, and therefore economic life, and therefore economic power. The driving force for all this is a phenomenon that, from what I gather, was discovered by Jacobs when she wrote The Economy of Cities: import replacement. Consider, say, Boston back when it was a tiny settlement, not yet a city, in colonial times. At first, Boston didn’t produce much, especially not much that would be of interest to its main trading partner, London. It exported some natural resources: timber, fish. Whatever else the Bostonians needed, they needed to import it from other cities, again mostly London. (Remember to think of imports and exports in terms of cities, not nations.) For instance, at first, all metal tools in Boston came from European cities, and were paid for by the revenue from selling the timber and fish. Then, one day, some Bostonians decided to build an ironworks and make metal tools themselves. (Pictured: a reconstruction of the Saugus Iron Works, established 1646.) This wasn’t of any interest to London or other European cities. The Bostonians weren’t nearly as good or efficient at making metal tools as Londonians were. So Boston couldn’t export the metal tools back to Europe — but it could use them internally, and also export them to other American cities that were about as poor as Boston was, or poorer. Internally, this meant the spark of a manufacturing economy in Boston, as easily obtained metal parts made it easier for other Bostonians to replace other imports from European cities, and eventually develop a symbiotic network of industries. It also meant that the revenue from fish and timber could be used to import new things, including new innovations from European cities (which would later become opportunities for more import replacement). And because there were customers for Boston-made metal goods in New York and Philadelphia, and eventually Cincinnati and Chicago and Pittsburgh as these cities came into existence, it meant additional revenue for Boston that it could reinvest into developing its production further. For Jacobs, virtually all city development can be seen through the lens of import replacement (which, to be clear, has approximately nothing to do with policies of import substitution industrialization; import replacement is not a policy, but a naturally arising free market phenomenon). Her book contains many other examples than Boston, such as Venice, which started off in the early Middle Ages as a small town that sold salt to Constantinople, but then diversified its production to become one of the wealthiest cities of its time; or Taipei and Kaohsiung, two cities in Taiwan that kickstarted their development not long before the 1980s, by forcing expropriated landlords to invest into local import-replacing businesses. One is reminded of Scott’s review of How Asia Works. Import replacement, then, is what makes cities economically powerful. And this power is so great that it causes ripples in distant places. In fact it is the main reason that anything happens at all in non-city areas. Jacobs gives the example of Bardou, a small village in southern France. Bardou looks like this: To the extent that Bardou ever had an economic life, that life was almost entirely driven by distant cities. In ancient times, the area was populated because of iron mines nearby. The mines were exploited to serve the needs of people in the distant cities of Lugdunum (Lyon), Nemausus (Nîmes), or even Rome. As Jacobs notes, we could say that the mines served “the Roman Empire,” but that would be another example of using the abstraction of sovereign countries when we should instead be specific. It was Lugdunum, Nemausus and Rome that wanted the iron — not some random rural area of the empire, and certainly not the part of the empire in which Bardou was located. Eventually the mines and the region were abandoned. More than 1,000 years later, peasants moved into the area and built the modern village. For centuries they lived a wretchedly poor life of subsistence farming. No cities exerted any influence on it, and indeed nothing happened. Then, in the 19th century, the people of Bardou learned that they could improve their situation by moving to distant cities such as Paris, and most of them did. Again, the force wasn’t being exerted by “France”; Bardou was already part of France. The force was specifically being exerted by Paris and other cities with jobs for poor peasants. By the 1960s, only one old man was left. That’s when two foreign visitors, a German and an American, happened upon the village, decided to buy most of it, revitalized it, and turned it into a tourist spot (and even, for a brief time, into a set for a movie company). Today Bardou is a popular place for travelers — who are mostly city people, and spend money that was mostly earned in cities. The Bardou story contains examples of several of the forces that import-replacing cities radiate, according to Jacobs. These forces are central to her thinking. There are five of them: Markets. Cities house a lot of people who need a lot of goods and services, and are therefore strong markets to sell goods and services to. This was the force that acted on the Bardou area when it was a Roman mining region, and again today when it functions as a tourist spot for city vacationers.
Inline links: import replacement, https://substackcdn.com/image/fetch/$s_!5j2T!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F7f2675d9-ce56-4ac5-9b78-a16720269dea_1600x1159.png, import substitution industrialization, Scott’s review of, Bardou, https://substackcdn.com/image/fetch/$s_!RfMs!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fc119b085-f7b3-4e09-a586-9f4fc4c2ea21_1200x1600.png
Your Book Review: Why Nations Fail
August 25, 2023 · Original source
Even if correct, it is much less interesting and useful than it appears. Epistemic status: I have a decade-old PhD in economics (not in the field of economic growth) and a handful of peer-reviewed papers in moderately-ranked journals. I'm not claiming to make any original technical points, or to give a comprehensive evaluation of the economic growth literature. My criticisms are largely straight from the authors' own mouths. 1. What is this book about? Why is it not very good? Acemoglu and Robinson (AR) argue that countries are rich or poor because of their political institutions, not culture, geography or policy ignorance. I'll do this as much as possible in AR’s own words. Why Nations Fail was written during the Arab Spring, so the preface begins with Egypt. Some stress that Egypt’s poverty is determined primarily by its geography, by the fact that the country is mostly a desert and lacks adequate rainfall, and that its soils and climate do not allow productive agriculture1. Others instead point to cultural attributes ... Egyptians, they argue, lack the same sort of work ethic and cultural traits that have allowed others to prosper, and instead have accepted Islamic beliefs that are inconsistent with economic success. A third approach, the one dominant among economists and policy pundits, is based on the notion that the rulers of Egypt simply don’t know what is needed to make their country prosperous, and have followed incorrect policies and strategies in the past. Unsurprisingly, those other economists and policy pundits turn out to be wrong and the authors turn out to be right. In this book we’ll argue that the Egyptians in Tahrir Square, not most academics and commentators, have the right idea. In fact, Egypt is poor precisely because it has been ruled by a narrow elite that have organized society for their own benefit at the expense of the vast mass of people. And the Egyptian lesson turns out to be general. Whether it is North Korea, Sierra Leone, or Zimbabwe, we’ll show that poor countries are poor for the same reason that Egypt is poor. Countries such as Great Britain and the United States became rich because their citizens overthrew the elites who controlled power and created a society where political rights were much more broadly distributed, where the government was accountable and responsive to citizens, and where the great mass of people could take advantage of economic opportunities. What are “institutions” anyway? (The economic and political kind, not the prison and mental hospital kind.) Basically, AR mean politics. The word "institutions" occurs over 1000 times in Why Nations Fail2. I'll just focus on how AR use it without worrying about the dictionary, different schools of economics, or other social sciences. They begin with what institutions do rather than what they are. Nogales, Arizona, is in the United States. Its inhabitants have access to the economic institutions of the United States, which enable them to choose their occupations freely, acquire schooling and skills, and encourage their employers to invest in the best technology, which leads to higher wages for them. They also have access to political institutions that allow them to take part in the democratic process, to elect their representatives, and replace them if they misbehave. The word is used dozens more times before ARattempt a more general definition. Each society functions with a set of economic and political rules created and enforced by the state and the citizens collectively. Economic institutions shape economic incentives: the incentives to become educated, to save and invest, to innovate and adopt new technologies, and so on. It is the political process that determines what economic institutions people live under, and it is the political institutions that determine how this process works. So while economic and political institutions can be separated, it is the political institutions that matter in the long run. The good kind of institutions that lead to economic growth are "inclusive", as opposed to "extractive". To be inclusive, economic institutions must feature secure private property, an unbiased system of law, and a provision of public services that provides a level playing field in which people can exchange and contract; it also must permit the entry of new businesses and allow people to choose their careers. ... such rights must exist for the majority of people in society. Political pluralism is necessary, but not sufficient without a strong centralised state. ... political institutions that distribute power broadly in society and subject it to constraints are pluralistic. ... the key to understanding why South Korea and the United States have inclusive economic institutions is not just their pluralistic political institutions but also their sufficiently centralized and powerful states. A telling contrast is with the East African nation of Somalia. I am still a bit hazy as to the relative importance of de jure written rules versus the de facto struggle for power. AR are somewhat circular: Politics is the process by which a society chooses the rules that will govern it. Politics surrounds institutions ... When there is conflict over institutions, what happens depends on which people or group wins out in the game of politics ... The political institutions of a society are a key determinant of the outcome of this game. They are the rules that govern incentives in politics. But overall, you could just say ‘politics’ and not be too far off. AR do this themselves occasionally. South Korea ended up with very different economic institutions than the North because different people with different interests and objectives made the decisions about how to structure society. In other words, South Korea had different politics. AR's academic reputation is based on statistical analysis, but Why Nations Fail tries to do narrative history, IMHO not very well. When Jeffrey Sachs reviewed the book, he complained: They never define their key variables with precision, present any quantitative data or classifications based on those definitions, or offer even a single table, figure, or regression line to demonstrate the relationships that they contend underpin all economic history. Instead, they present a stream of assertions and anecdotes about the inclusive or extractive nature of this or that institution. AR replied baldly: Sachs ... argues that we provide no evidence. Right, we do not in the book. But that’s because a book for a general audience is not the right forum for presenting academic research, and we spent many years of our lives precisely on writing academic papers providing exactly the sort of evidence. ... So yes, we don’t provide the econometric evidence in the book, which isn’t of course the right place to do it, but econometric evidence is abundantly loud in the way it speaks on these topics. So, don't expect Why Nations Fail to be an accessible explanation of AR's academic work, which is what I was hoping for when I first read it. What do they spend over 500 pages on then? Well, after the preface, there's fifteen chapters of, as Sachs says, "assertions and anecdotes". Not just about "the inclusive or extractive nature of this or that institution", to be fair, but how institutions can change at "critical junctures" such as the Black Death or colonisation, and why it can be in elites’ interests to block economic innovation if it threatens their power, so that growth under extractive institutions is unlikely to be sustained. These chapters are not particularly good – I found them poorly organised and repetitive – but not particularly bad, if you are willing to accept the underlying premise that institutions are the main determinant of economic growth. Cumulatively they have an effect similar to the Old Testament, if you are willing to accept the underlying premise that the fortunes of the nation of Israel are determined by the LORD. Only the second chapter, ‘Theories that Don't Work’, makes a sustained argument against alternative theories. Geography is disposed of by noting the stark differences at the US-Mexican, North-South Korean and East-West German borders, and the reversal of fortune by which the present day US and Canada only became richer than Mexico, Central and South America following European colonisation. Culture is hand-waved away with the assertion that institutions determine the any relevant cultural behaviours, not the other way around, referring to the same border examples, the rapid catch up of Catholic Europe despite Weber's Protestant Ethic, the malign influence of the European and Ottoman empires on Africa, the range of outcomes within the former British Empire, and the more European population of Argentina and Uruguay versus the US and Canada, or of Columbia versus Ecuador and Peru. Not a bad list of anecdotes, but one could equally well point to the cross-border success of Ashkenazi Jews, overseas Chinese, or Baltic and Volga Germans. Ignorance is simply dismissed with the assertion that "if ignorance were the problem, well-meaning leaders would quickly learn what types of policies increased their citizens’ incomes and welfare, and would gravitate toward those policies." Various good and bad policy changes are explained as the result of political pressures rather than improved knowledge. The implication seems to be that good policies are so obvious they don’t require expert knowledge or advice, or that the experts never get it wrong. This appears most implausible in the debate over socialism and economic planning. Writing off the entire Communist experience as simply another elite trying to preserve its power feels inadequate, especially considering that some distinguished bourgeois economists thought central planning was a plausible road to riches until quite late in the day. Genetics or race is not mentioned, but would presumably attract the same counterexamples as geography and culture. Another theory AR do not discuss is crude exploitation: while colonial empires are excoriated, it is for setting up persistent extractive political institutions rather than for a direct theft of resources. The prosperity of white-owned South African farms next to poverty-stricken Bantustans is explained by the better quality of the institutions available to whites under apartheid, not relative population densities and land quality. For the rest of the book, I'll just list a few nitpicks to signal I read the whole thing and know a bit of history, but feel free to skip this – the real evidence for AR's thesis is in their academic papers, and I'll discuss those in the next section. I think AR overrate the importance of the Glorious Revolution, to the point of claiming it "created the rule of law" – after all, Parliament had already deposed and executed a king, then brought back the king’s son on their own terms after a decade of republican government. No less a luminary than Edmund Burke asserted "The Revolution was made to preserve our ancient indisputable laws and liberties, and that ancient constitution of government which is our only security for law and liberty." Also, strong signs of British economic uniqueness – the abnormal growth of London and reliance on coal as a fuel – predated 1688.
Inline links: 1, 2, dictionary, schools, economics, social sciences, reviewed, replied, Protestant Ethic, planning, distinguished, bourgeois, Glorious Revolution, Edmund Burke, predated
23: California Dreamin'
September 04, 2023 · Original source
Seen on the Praxis founder’s Twitter account. Milady is some kind of NFT thing, otherwise it makes as much sense to me as it does to you. But the other half of the paradox is the constant rumors that they’re competent and have some kind of good plan. These are spoken only in hushed whispers, I don’t know the details. But in 2021, they raised $4 million in a seed round from well-regarded venture capitalists whose investments usually make money. In 2022 they raised another $15 million in a Series A round from . . . okay, partly from Sam Bankman-Fried and Three Arrows Capital, two notorious crypto scammers. But you would think scammers would be extra careful not to invest their own money in scams! Also, they recently signed on David Weinreb, a completely normal (and well-regarded) city planner person. What’s the strategy that both involves both Milady Raves and lots of competent people agreeing you’re a good investment? One strategy is something like: buy some land somewhere. Build some houses and streets. Convince digital nomads to move there on the grounds that you are very cool and visionary. Do some cool and visionary seeming things, or at least throw some really good raves. Other digital nomads get jealous and move there too. Sell parcels of land to these people, get rich, pay back your investors. And then who knows, maybe create a new civilization that redefines what it means to be human. Consider Elon Musk. Elon Musk is good at certain business-related skills. But that’s not the essence of Elon Musk. The essence of Elon Musk is that he’s a Visionary who can bring the Glorious Future. We know this because he’s a crazy person who says stuff that doesn’t really make sense. When Elon Musk buys a company, its value goes up - maybe partly because people expect Musk to make good business decisions, but also partly because now the company is part of Musk’s Glorious Future, and therefore exciting. Employees, customers, and investors all get excited and reinforce each other in a virtuous circle. And although Musk might not always accomplish the exact Glorious Future future he promises, his companies do well and make money, because having motivated employees, star-struck customers, and willing investors is a great combination. Elon Musk has an aura of destiny because he succeeded at his first several companies. Dryden Brown of Praxis Society, lacking a Paypal Mafia to join, is trying to hack together an aura of destiny out of raves and angel-related videos. So far it seems to be going pretty okay. Prospera Sues Honduras For 2/3 Of Its National Budget To refresh: in the mid-2010s Honduras’ pro-market government created ZEDEs - businesses that bought up unoccupied land could start their own districts with their own preferred legal system in exchange for bringing in investment. The government knew businesses wouldn’t invest long-term if the next government could just cancel the agreement and seize all of their stuff, so they fortified the law with as much protection as possible. It would take a long constitutional amendment process to repeal, and ZEDE investors might be able to object to any changes under international investment treaties. Lured by these protections, three companies started ZEDEs, including a big high-profile one called Prospera. In early 2022, a socialist government took power, and started trying their best to destroy the ZEDEs. They started the constitutional amendment process (they seem to think they’ve finished it, but a Prospera rep I talked to believe they have to hold another vote by the end of this year, something I see no signs of them doing) and have been harassing and stonewalling existing ZEDEs. One ZEDE, Orquidea, shut down immediately. A second, Ciudad Morazan, seems to still be operating but I cannot figure out exactly how or why. Prospera has been most vocal in its opposition, and sued Honduras for $11 billion in the World Bank’s court of investment arbitration. (Prospera has only spent about $100 million so far, so it’s unclear why they deserve 100x that in penalties. Also $11 billion is “two-thirds of the 2022 Honduran national budget”, and forcing Honduras to pay it would cause national catastrophe. This might be more of a highball offer than a number they actually expect to get.) This article (poorly translated from Spanish, sorry) has the most information. It suggests Honduras believes they signed onto the investment treaties “with reservations”, ie conditional on being allowed to do things like shut down ZEDEs, and that therefore the suit is meaningless and they will not defend themselves. Although the magazine is on the government’s side of the overall issue, it suggests they didn’t actually sign on with reservations, that the country’s lawyers might just have no idea what they’re talking about, and that their bold strategy of refusing to defend themselves will not pay off. In contrast, Prospera has prestigious lawyers specializing in exactly this area, so things aren’t looking good for the government. Honduras seems to recognize this and is threatening to withdraw from ICSID, the international investment treaty that governs such disputes. This wouldn’t be completely unprecedented - Venezuela, Bolivia, and Ecuador have also done this. But ICSID rules say that withdrawing from ICSID, while it might help prevent future cases against you, doesn’t cancel existing cases, and wouldn’t protect Honduras against Prospera’s claim. (How would ICSID collect against Honduras if they lost? I don’t know, but I assume the global financial order has some way to make your life worse if you defy it.) I think everyone is hoping Honduras realizes that cancelling a flourishing economic zone that’s bringing lots of investment into the country at no cost to them - just isn’t worth taking an $11 billion loss, cancelling international treaties, and scaring off future investment. But who knows how these people think? In other Prospera news: Prospera announces another $36 million in recent investment, which I take as evidence that VCs with good lawyers and research departments also think its case is very strong.
Inline links: the Praxis founder’s Twitter account, raised $4 million in a seed round, raised another $15 million in a Series A round, recently signed on David Weinreb, To refresh:, harassing and stonewalling, sued Honduras for $11 billion, This article, threatening to withdraw from ICSID, Venezuela, Bolivia, and Ecuador have also done this, announces another $36 million in recent investment
Highlights From The Comments On Last Week's Model Cities Post
September 11, 2023 · Original source
Final note: other arbitral Rules and institutions exist, and investment treaties typically provide options, so denunciating the ICSID Convention is often done more for domestic headlines than anything else. (Rejoining it, as Ecuador recently did, is done for international headlines, as in "we are open for business".) As the article notes, the ongoing arbitrations would not be impacted by the denunciation.
Dictator Book Club: Chavez
November 02, 2023 · Original source
A sublimely gifted politician with empathy for the poor, the power of Croesus, the result, fiasco. While he thundered about bringing equilibrium to the universe and polarised his country, foaming passions into hate, neighbours built more sustainable economies and tackled long-term poverty. Allies like Bolivia, Nicaragua, and Ecuador saluted the comandante but did not emulate his economic model, for that way lay ruin. Brazil seized regional leadership. Venezuela atrophied. Nothing worked, but there was money and spectacle. An empty revolution, then. No paradise, no hell, just limbo, a bleak misty in-between where ambition and delusion played out its ancient story. The farces and follies did not add up to despotic horror but they bore the melancholy echo of opportunity squandered, of what might have been, and there was the tragedy.
The Populist Right Must Own Tariffs
April 30, 2025 · Original source
If one day Joe Biden had conceived a personal hatred for the nation of Ecuador and tried to sacrifice America’s interests on the altar of some anti-Ecuador crusade, his handlers would nod, smile, give him a few extra pills, and he would forget about the whole thing. And maybe that particular metaphor owes more to Biden’s age than the inexorable logic of liberal institutionalism. But to the same would be true (to a lesser degree) of Clinton/Obama/Harris/whoever. Congressional Democrats would push back. State Department bureaucrats and White House staffers would water down the orders. DNC operatives would say it doesn’t play well with [list of one million different activist groups who must be kept satisfied at all times]. Democrat-controlled media would attack the policy, and the base would rebel against it. In the end, Clinton/Obama/Harris would relent: partly to preserve political capital, partly because only the sort of person who would relent in these situations would have gotten the job in the first place. I think both liberals and conservatives agree that this story is directionally correct - otherwise you wouldn’t need the “unitary executive” doctrine or 3,000,000 pages of Moldbug prose. But why is it correct?