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Tuesday, April 3, 2018

Wakanda and Economics

I told my teenage son that the economics of Wakanda, the home country of the "Black Panther" in the recent movie, raised some interesting questions. He looked at me for a long moment and then explained very slowly: "Dad, it's not a documentary." Duly noted. No superhero movie is a documentary, and pretty much by definition, even asking for plausibility from a superhero movie is asking too much.  But undaunted, I continue to assert that the economy of Wakanda raises some interesting questions. For some overviews, see:

For the 8-10 people on Planet Earth not yet familiar with the premise, Wakanda sits on top of the world's only supply of a rare mineral called "vibranium," which absorbs vibrations, including sound, kinetic motion, and also gives off the magic "radioactivity" which in superhero movies then creates whatver other human strengths or plant and animals that seem useful for the plot. Wakanda has used this mineral as the basis for building what is portrayed in the movie as a very technologically advanced and sophisticated economy. However, a quick glance around the world economy suggests that countries endowed with valuable natural resources don't always show broad-based economic success or participatory forms of governance (think Venezuela, Angola, or Saudi Arabia).

There's a substantial research literature on the "the resource curse question" of why natural resources have so often been accompanied by a lack of growth. For an overview, see Anthony J. Venables, 2016. "Using Natural Resources for Development: Why Has It Proven So Difficult?" Journal of Economic Perspectives (Winter 2016, 30:1, pp. 161-84).  When a country is in a situation in which the export of a key natural resource looms large, it often leads to a situation of economic and political economy. Moreover, a country with very large exports in one area is likely to have an economy that is not well-diversified, and thus become vulnerable to price shocks concerning that resource.

How does Wakanda escape these traps? Well, it isn't obvious that it escapes all of them. Political power in Wakanda is concentrated in a hereditary monarchy, with arguments over succession decided by ritual combat. However, the comic books also suggest that Wakanda sells enough vibranium on world markets to raise money for a large national investment in science and technology. Thus, Wakanda manages to become a combination technology-warrior state, in which the leaders seem to be generally beneficent. 

In the real world, countries that have managed to overcome the resource curse to at least some extent, like Norway, Indonesia, Botswana, and others, often have a government focus on spreading the benefits of their mineral exports across the population. In turn, widespread buying power in the economy helps other industries to develop. A "social fund" is often set up to fund human capital and financial investment, and to assure that the benefits of mineral exports will be spread out over time.

The level of inequality in Wakanda the "Black Panther" movie is not clear. In the old comic books, the Black Panther is described as the richest person in the world, thanks to effective ownership of the mineral wealth, while some people of Wakanda are portrayed as living in traditional huts. The movie portrayal of household life in Wakanda and the full distribution of income is not clear ("Dad, it's not a documentary!") but in various montage scenes of daily life, it does not appear that everyone is living in modern luxury. 

As a scientist-warrior state with an unlimited supply of cheap vibranium, Wakanda has managed to develop many upstream uses of vibranium, with a variety of applications to transportation, health, and weapons. In the real world, developing upstream uses of domestic resources is often tricky. It works, sometimes; for example, Botswana has managed to have more diamond-cutting and sales done in Botswana, rather than elsewhere. But it is hard for the economy of a small country to stretch all the way from traditional economic practices all the way up to the highest techology, with all the steps in-between. As the Economist notes:  "Countries often find it easier to move diagonally, rather than vertically, graduating into products that belong to different value chains but require similar mixes of labour, capital and knowhow."

Wakanda has a high level of prosperity while being almost entirely cut off from the outside world. This seems to me an ongoing dream of politicians from communities countries: how can my jurisdiction become well-off by trading with itself. In this view, trade and investment by outsiders almost always ends up being exploitative, and best minimized or avoided. However, rhere are not any countries that have managed to accomplish this combination of economic development and splendid isolation in the real world.  

The underlying issue here is that Wakanda is portrayed as being well-off because of its combination of vibranium and science. But in the real world, economic development typically involves a number of complementary ingredients. For example,  vibranium had to be discovered, mined, and refined. There had to be process for discovering its  scientific properties, and then engineered these properties into products. An obvious question (for economists, at least) was who had the incentive to do the innovation, the trial-and-error learning, and the investments in human and physical capital to make all this happen? In the real world, all of this happens against a backdrop of incentives, competition, property rights, financial contracts, and on The movie doesn't give us a back-story here. ("Dad, it's not a documentary.") But technologically leading economies typically don't emerge through the actions of a beneficent hereditary monarch.  

For an economist, an obvious question is whether the people of Wakanda might be better off with greater openness to the world. From a pure economic point of view, it seems clear that Wakanda could benefit from a greater opening to international trade. At Wakanda's stage of technological development, it wouldn't even be necessary to sell vibranium. Instead, it could sell services that made use of vibranium like construction and public works, health care, and the like, while still keeping control of the underlying resource.  

But economics isn't everything. Wakanda also clearly places a high value on its traditional culture, which can be a two-edges sword. For many people much of the time, traditional culture can be a source of purpose and meaning; but for many of the same people at least some of the time, traditional culture can also feel like a trap and a limitation.  I learned from reading Subrick's paper about recent developments in the back story. He writes: 
"Although the Black Panther has retained political legitimacy throughout the centuries, in the new millennium Wakandans have begun to question the validity of their government. The Black Panther’s support depends on his ability to provide the most basic of public goods—security from outside invasion and domestic turmoil. In the story arc “A Nation Under Our Feet” Ta-Nehisi Coates and Brian Stelfreeze describe a Wakanda on the verge of civil war. The combination of the never-ending attempts by outsiders to steal vibranium, recent internal challenges to his rule, and political intrigue, not to mention a terrorist organization poisoning the minds of the people, have raised the question of whether a monarchy and freedom are compatible. Government by a monarch in the age of democracy creates tensions within society. Furthermore, high levels of income inequality exacerbate these societal pressures. In Wakanda, traditional ways of life exist in the presence of the world’s most sophisticated technologies. Citizens live in huts that are located next to the factories. A disenfranchised and relative poor citizenry are beginning to demand massive social change."
To put it another way, the concerns of social scientists about the resource curse, inequality, openness to international trade, and lack of democracy are actually becoming, in their own way, part of the plot.