Reports of people living in tents and shacks at Attawapiskat evoke comparisons with the Third World, with people living in the shantytowns of South Africa and the barrios of Mexico. The comparison is apt, because we now know a lot about how people in the Third World have elevated themselves out of extreme poverty.
Stable government is essential. Failed states, such as Somalia and the Democratic Republic of the Congo, produce colossal misery. But it must be the right kind of government. Regimes that arbitrarily violate the rule of law, such as Robert Mugabe’s Zimbabwe, or concentrate all property rights in the state, such as China under Mao, produce poverty on a mass scale. Redistribution through foreign aid also does not work. Countries that have received the most foreign aid, such as Tanzania under Julius Nyerere, have performed poorly.
Democracy is desirable for many reasons but does not in itself lead to economic progress; think of India before the opening of its economy. And authoritarianism can sometimes produce economic advancement, as with China after Mao and Chile under Augusto Pinochet.