I am unwilling to give the specifics in an Amazon review, but I can tell you this: I work in this industry. I know well the issues the author speaks of: I have been elbows deep in oil and the Middle East for over a decade. Had I the time, I probably could have written this book myself, although I admit Ross had some data I was unaware of.
I have three big beefs with this book -- I say three, but the first two are ultimately the third. I'll explain in a bit.
And yes, Ross, if you're listening, I'm calling you out on it. I got your number.
My first objection is that Ross intends something by the phrase "oil curse" that is sharply different from what the rest of us in the industry -- at least the people I work with -- mean by "oil curse." Or at least it's only partially what we mean.
To wit, Ross uses the phrase "oil curse" to mean something that analysts in the field usually term "Dutch disease:" basically, the phenomenon whereby the easy money to be gotten from oil exports tends to crowd out growth in other areas, particularly manufacturing. (Look it up on Wikipedia.) This is what Ross means by the term "oil curse," nothing further. Of course, he is well aware that his definition only partially covers what other people mean by it, but he has a reason for circumscribing his investigations. Read on.
What I -- and others I work with -- mean by "oil curse" encompasses the industrial aspect, but to a large degree is also cultural. The idea is that when you are able to set up a society with free health care, free education, free roads, etc. and all without taxes, you begin to see unpleasant effects on the character and work ethic of your people. People stop being so civic-minded, for one, since there's a "largesse" ethos to public life whereby people figure "we get what they give us" and it becomes taboo to complain.
In other words, since EVERYTHING is a gift from above, people are unwilling to criticize or do much to change their society (e.g., volunteer work, civic groups, etc.). This can be contrasted to life in a place where there's high taxes: since people are PAYING for all these benefits and know it, they're much quicker to complain about a problem or work to do something about it. The net result is that life ends up being much better in societies where you've got taxes: streets are cleaner, governments more efficient, schools more accountable, etc.
But, but, but. That's not the main part of it. The real part of the "oil curse" is that your people eventually become like helpless infants, unable to come to work on time, do a full day's work, take education seriously, strive to improve themselves, bring their work home with them, or avoid taking shortcuts on the job. There are exceptions, of course, but in the main, oil corrodes the work ethic of your people, because prosperity becomes unyoked with hard work and education.
Ross doesn't go anywhere near this hot-button issue.
My second beef with this book is that Ross doesn't bring religion into this book at all, declaring sweepingly -- without even an argument -- that it's irrelevant.
Here's a quote from early in the book that'll give you a taste of his reasoning: "These countries suffer from authoritiarian rule, violent conflict, and economic disarray because they produce oil..." Uh, you can't think of any other reason, Ross? Are all relevant variables being held constant?
On p. 2 (!), you can find an intelligent-sounding way of saying "duhhh": "Not all states with oil are susceptible to the curse. Countries like Norway, Canada, and Great Britain, which have high incomes, diversified economies, and strong democratic institutions, have extracted lots of oil and had few ill effects." It's like the guy's got blinders on!
One of Ross's big points is that "Dutch disease" really doesn't constrict economic expansion in other areas as much as developmental economists (and he previously) have asserted. Here's a paraphrase of his proof: "Norway exports oil. Saudi Arabia exports oil. Saudi Arabia's economy lacks diversification; Norway's doesn't. Hence it can't be the oil that's preventing diversification. It must be governmental policies" That's the structure of his argument. Seriously.
Once, in Kuwait, I was at a university to give a presentation. In one of the back rooms I came across an Indian janitor sharpening a giant mountain of pencils. Who were the pencils for? Why, master's degree candidates! Candidates who were about to sit for some sort of examination yet found it beneath their dignity to sharpen their own pencils. So that had to be done for them, not to mention providing the pencils in the first place. At a gym in Dubai once, my wife was treated to the spectacle of an enormous Emirati woman lifting weights, weights that had to be brought to her from their stands by her Indonesian footmaid, since she couldn't be bothered to go fetch the weights off the stands herself. And in Saudi Arabia, until very recently, McDonald's wouldn't open for breakfast. Why not? Couldn't their food engineers concoct convincing substitutes for McDonald's pork-heavy and therefore haram breakfast menus? Sure they could; that wasn't the problem. The problem was that not enough of the population was getting up before 10 a.m. to make it financially worthwhile for their stores to open before then.
THAT is the other part of the curse of oil. It's something that happens to your people.
Sure, there's an investment/interest-rate element to it, and for that angle, Ross's book is welcome. There are not enough books like this, especially ones that don't scrimp on data. But the problem is much deeper than the relationship between the oil and gas industry and others.
Hence we come to my third gripe about this book, which explains why Ross is doing what he's doing in gripes #1 and #2.
This book is nothing more than a big ad!
An ad?! For what?
Why, for Ross himself!
You see, if we aren't going to talk about culture or religion, and if the "oil curse" is ONLY restricted to manufacturing, then there's hope that by adopting the right policies certain petrogovernments will be able to avoid or minimize their oil curse.
Yup. By pretending (he well knows otherwise) that the oil curse does not have cultural or religious facets, Ross can thereby offer himself as a possible HIGHLY-PAID consultant for certain countries, such as the petrodollar states of the Gulf.
And this, I say, was the real purpose behind this book. To assure such governments -- who are always on the lookout for speakers, analysts, and consultants -- that, hey!, not only do I believe their problems are fixable because they're entirely a matter of governmental economic policies (which I'm here to teach you), but rest assured that I won't come to your country and start making statements about how the oil has brought on much deeper problems in your culture than can be fixed with a swift governmental edict.
In conclusion, I accuse the author of writing a book that essentially adds nothing new to the debate and simply presents the kind of findings that, while seeming harsh, are really what such governments would like to hear.
. . . all the better to get himself hired with. Currently Ross is a professor of Political Science at UCLA, but he is aiming for higher things with this book.
In all, not a bad strategy. Heck, if he can pull it off, there's millions to be made. They're always looking for a guru.
But you haven't pulled the wool over my eyes, Mikey.
UPDATE:
As I wade deeper into this dreck, I can think of a couple more beefs with it:
#4: Ross is far too credulous of the statistics that come from this part of the world. It's not the West: nothing happens when they fake statistics.
#5: Like virtually all economists, Ross gives short shrift to things he cannot quantify. His arguments revolve 100% around things he can quantify, because if you can quantify them, you can do math with them and make pretty graphs. Other elements might remain impossible to quanitfy, yet decide the game. Numbers don't capture everything. Economists like Ross typically admit this, and then proceed with their conclusions as if their numbers have captured everything.
#6: I would also accuse Ross of proceeding in an unscientific way. He starts off from politically correct assumptions and never calls them into question. There are certain things he's not allowed to assume, to analyze, or to conclude. Hence we must be looking for something else. Let's see if we can find it, shall we? Norway has oil yet a great deal of freedom and good government? Hmmmmmm. What could it be? What could it be? Guess I can't blame Ross, though. He would swiftly be sacked from his job if he did venture into that territory.
