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Comment by lordnacho | Hacker News Reader

It's not all bad. If your economy depends on simply taking money right out of the ground, the government will make sure that's done, but with zero accountability.

An economy with more diverse interests will also be one where no interest has total power and will need to explain itself.

Edit: yes, the transition is gonna be painful.

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Historically the main problem with state control of oil hasn't so much been "a lack of accountability" as "The united states government and client states aggressively destabilize your country in order to facilitate access for private oil companies"

No, it has more to do with the fact that an authoritarian state can fund itself with oil. Elite politicians and oil companies employees live a modern westernized lifestyle but the rest of the population remains in deep poverty. Those politicians aren't lacking anything but since the oil trade is deeply connected with the government anything that doesn't involve oil will weaken the government's influence over the country. It is much easier to stay in power by oppressing your population.

There is also the opposite scenario. You have an economic sector that is so incredibly lucrative that you can just bribe your way to popularity by creating a welfare state. Anything that pushes the focus away from the main sector would also involve losing the welfare benefits even though it is better in the long run.

Here comes a terrible analogy. Oil is like an economic painkiller. The pain is gone but you are still injured.

Not so bad an analogy... Venezuela is suffering just so.

Rulers of resource-rich countries can maintain power while ignoring their populations. Rulers of resource-poor countries depend on their population's productivity for income. This is why autocracy and resource riches go hand in hand far beyond the effects of American hegemony.

Saudi Arabia and other oil countries treat their citizens very well. Many of them collect a fat paycheck from the government without having to do anything. Unskilled migrant workers however do not have it so nice.

Unless you are friendly towards the US already, if so then you can be the worst exporter of Wahabbi extremism and we'll sell you billions in weapons to massacre your neighbors.

Russia meddles as well, although they do it as competitors... Russia makes more money from oil and gas if the Middle East has “problems” with oil & gas production.

In fact we're going to see a great difference between those nations that invested the "money from the ground" to develop an economy and those who used it to buy soccer teams.

Football teams at a certain scale can be self-sustaining PR machines. Take Manchester United or Real Madrid: they largely make enough money to stay afloat and competitive, while at the same time opening a lot of doors for their owners/controllers. Man United is even an actual profit generator for its owners.

I think a bunch of those flashy oil-money acquisitions that were seen as wasteful, will eventually be recognised as a decent diversifying strategy in sectors where barriers to entry are very high. The Emirates airline was initially seen as a white elephant, but it kickstarted the Dubai hub and was, overall, a pretty strategic move.

But they are small potatoes compared to national budgets.

I mean, the whole world is becoming increasingly 'top heavy', with economic growth going primarily to those who own stock. Just owning successful companies isn't more difficult than pumping money out of the ground - neither requires much nation building. And Saudi Arabian royalty has already been out for years investing in Silicon Valley - I think they're content to jump on the wagon of companies that are already successfully extracting money from the western middle class, rather than try to build up a middle class and well-functioning society of their own.

That makes sense, but omits the fact that transition from one state to the other can be very bloody.

And the end state is hard to predict

That makes sense, but I am worried about the path from where many Middle East oil producers are right now, and a future where they have a robust economy based on diversified production.

UEI, Qutar, Saudi Arabia have started the process. It might be similiar.

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