2025-10-07 20:00:23
In Internet Will Kill the Nation-State, we explored how communication technologies destroyed the feudal system and the Church, and created the nation-state. In Pax Mercatus, we saw how agricultural and transportation technologies also contributed. Finance had a major effect as well: We saw in How Silver Made Chinese Empires the ways in which silver made and unmade Chinese empires. In Europe, silver also triggered the discovery of America, a technological explosion, and a runaway chain of events that replaced feudalism with capitalism and nation-states. If you understand this, you’ll be able to understand why nation-states are threatened by cryptocurrencies today, and how their inevitable success will weaken nation-states. In this premium article, we’re going to explore how Europe starved for silver, and how the reaction to this flooded the world with silver. In the next article, we’re going to look at the consequences in the modern era, and the takeaways for today.
It’s 1460, and Europe is starving for money. Silver and gold are so scarce that their value is skyrocketing compared to other commodities, so their prices plummet. With deflation, everything will cost less tomorrow than today, so people hoard their precious metals. The more they do so, the less gold and silver are in circulation, the more their value climbs, the more prices drop, and the more the economy grinds to a halt: Without money, people must resort to barter, which slows down trade. Bankers stop lending because it’s unclear whether they’ll be paid back. Investment drops. The economy grinds to a halt.
How did we get here?
A century earlier, around 1350, the Black Death spread across Europe, killing 25-50% of its population.
Men were dying, but coins were not.—David Herlihy
For a century, there was more coin than people, so they didn’t notice when silver and gold production slowed down. But it did; first, because of fewer miners.
Second, because mines ran out of gold and silver.
Third, the supply of gold from Africa collapsed after the Mali Empire civil war in the 1360s and the Songhai Empire instability.
Fourth, mines in southeastern Europe, in Serbia and Bosnia, fell to the Ottoman Empire.
So new sources of silver and gold shrunk. Meanwhile, silver sinks continued. Europeans kept buying Chinese silks, Indian cotton cloth, dyes, and spices, Middle Eastern sugar and drugs… But Europeans had little to export: wine, slaves, wood, salt, and little more. Italian traders paid one third in merchandise and two thirds in precious metals.
As silver and gold became scarcer, people started debasing the currency: Diluting it with other metals, clipping its edges…
Between the Black Death, the scarcity of metals, the debasement of currency, the incessant warfare, and taxes, people did everything they could to hoard and hide their precious metals, whether through hidden coins, filled chests, plates, and any other conceivable way.
Fear that debtors would not repay loans reduced the issuance of loans. Without them, trade and investment stopped, further tanking the economy and fueling the vicious cycle. Deflation across Europe reached 35%.
But these issues had far-reaching consequences. A huge one was feudalism.
If you’re a farmer, how can you sell your harvest if nobody has coin? As a noble, how can you hire somebody to work on your lands if you can’t pay them? You pay in kind, which in this case means with the harvest itself. So in large part, feudalism was a system of duties because there was no money.
So how did Europe get out of this?
When we say some resource is exhausted, what we generally mean is… with current technology. People abandoned mines when they couldn’t figure out how to reach more ore, or when they couldn’t get more metal out of them.
One of the most typical issues was that ore is in mountains, but mountains also have something else: rain. Mining shafts would get flooded, so mining was restricted to the surface.
As silver became more and more valuable, flooded mines suddenly became attractive. How could we get this water out so we can keep mining?
This new tech is so incredible that I couldn’t stop myself from playing with these tools. This was the original:
This is a photorealistic rendition:
And this is a 3D version of what these works might have looked like:
Romans knew about waterwheels and pumps, but they never used them for extracting water out of mines. Central Europeans put them together into ever more complex systems to dry up mines and extract more ore.
Streams were not available everywhere, though. How could Central Europeans lift water where there was no stream to power their wheels? With horses:
The horse gin could pull humans, ore, and water out of the hole, but how did miners get the ore out of the mine? In the 1500s, they were already using carts and tracks.
Minecart from the 16th century, found in Transylvania. Source. Versions of this with iron fittings were already described in De Re Metallica in the 1500s.
Many related technologies, invented earlier, were rediscovered during the Great Bullion Famine and became popular, spreading across Central Europe first and later all of Europe.
Another example is the camshaft, which allows rotation into vertical motion.
It enabled the spread of the stamp mill:
Which enabled crushing ore much more efficiently. Blast furnaces allowed the extraction of more bullion from the ore (bullion is the processed metal, as pure as you can get it, but not yet shaped into money. Ingots are a good example). All these are precursors of the industrial revolution that saw massive development as a result of the Great Bullion Famine, which makes you wonder: If there had been no Black Death, the Bullion Famine would have hit earlier. Would modern world development have happened earlier?
But there were two significant innovations that allowed Europe to increase its silver production by 5x between the 1460s and the 1540s.
Both innovations were new processes to extract more silver from ore. The first one is called liquation, and was first discovered in southern Germany in the mid-1400s, just as the Great Bullion Famine was hitting hardest. Of course, that’s not a coincidence: It was the bullion famine that was spurring mining innovation. Within 15 years, it had spread throughout Germany, Poland and the Italian Alps.
For thousands of years, people knew how to use lead to extract silver, in a process called cupellation. But there was no more lead-silver ore left to mine economically. There was, however, a lot of copper with silver. Metallurgists just didn’t know how to separate them. This is where liquation came in: Metallurgists learned how to liquefy the metal to a high enough temperature (thanks to blast furnaces) so that copper would rise to the top and silver would concentrate at the bottom. They would take out that bottom with lots of silver (still mixed with some copper), and then they’d add a lot of lead to that and melt it again. Silver prefers lead to copper, so it would attach to the lead. Once they obtained the silver-lead mix, smiths used the existing cupellation process to extract the silver from the lead.
Slowly, Europe’s supply of silver increased, but it wasn’t enough. Europeans were desperate to get more silver. This was one of the key drivers behind the expeditions to America.
We’ve already explored how Portugal’s discovery of an alternative path to Asia was made to bypass the Ottomans, who had taken control of Istanbul and blocked Christian trade through the Silk Road. But that trade still required gold and silver, and Europe didn’t have any. So the Portuguese were also looking for gold and silver deposits to mine. They found some in Western Africa—remember the Mali Empire—but that was not enough.
Now you know why Spanish Conquistadors were so obsessed about finding gold and silver in the Americas. It was not just a matter of greed. It was an existential matter for Europeans after the Great Bullion Famine. This is why Columbus mentioned gold 65 times in his diaries!
Spaniards didn’t find much gold in the Americas, but they did find silver. Unfortunately, the high-quality silver ore quickly ran out, and Spaniards were left with ore that didn’t contain enough silver to be extracted.
That’s when they invented a new technique to get more silver from the lower quality ore: amalgamation, via the patio process.
The concept is quite similar to liquation, except you don’t need to melt the metals, and you use mercury instead of copper and lead. Mercury binds to silver and gold, but not base metals like iron, copper, or lead. So the Spaniards took the finely crushed ore, added salt to bind to the silver, then added mercury to bind to the silver salts, and finally used cupellation to separate mercury and silver (or gold). It’s called patio (“courtyard” in Spanish) because all that stuff was just mixed in shallow pools, treaded on to mix well, and left for the sun and wind to bake. This was the result:
We already covered the consequences of this massive supply on China, but in Europe the consequences were even more intense:
The rise of the Spanish Empire
Its destruction
The rise of some specific families that changed geopolitics forever
The winning countries were not the obvious ones
This undermined feudalism
The nature of wars changed, and that ushered in nation-states
The Industrial Revolution was made possible
We’ll cover these in the next article!
2025-10-03 19:02:47
This article is the third on the topic of why warm countries are poorer. The first laid out the theory, and the second and this one address the comments.
In the previous article, we discussed why many alleged examples against the theory were wrong, including examples like rich mountainous countries (eg, Switzerland, Austria), poor low-lying countries (eg…
2025-10-02 03:30:06
In the last article, Why Warm Countries Are Poorer, I posited that mountains are the most underrated factor: A sizable share of tropical people live in the mountains, where temperatures are cooler, but this brings them high trading costs and ethnic conflict, which impoverish them. This article is now the most liked and commented article of all time in Uncharted Territories. This trove of fantastic comments have furthered the debate and illuminated new aspects, so I thought I’d address them:1
In today’s article:
Geographic arguments against the theory: Switzerland, Austria, Colorado, India, Cambodia, Indonesia, China…
Has race had any role in warm countries’ poverty?
Does this disregard colonialism?
In the premium article later this week:
More arguments against this theory
Does agriculture really matter in the 21st century?
Is this mountain thing a correlation or causation?
What other examples support the theory? Afghanistan, Papua New Guinea, Cameroon, US
Is Air Conditioning really that important?
What’s the role of institutions?
Is GDP the right metric here?
What other factors might have contributed that I haven’t mentioned yet?
The argument is: Switzerland is mountainous, yet rich. Therefore, mountains can’t cause poverty.
Look at Switzerland: a highly mountainous country far from the tropics, yet one of the richest on Earth (GDP per capita ~$100k). Its success comes from embracing independence and decentralization—cantons with strong local governance, direct democracy, and neutrality, the opposite of centralized empires like Russia or Spain. This suggests mountains don’t inherently cause poverty; they reward federalism and bottom-up integration over top-down control.
I wrote about Switzerland here, but I haven’t written a full-length article on it yet, so very quickly:
Despite having lots of mountains, Switzerland’s inhabited area is not that high, and is extremely well connected with its neighbors:
The Swiss live on a plateau that’s not that high. Geneva is at ~500 m elevation (1400 ft), lower than Madrid.
It connects by river to Lyon in France (300 m / 900 ft). I assume the river is not naturally navigable, but the road between the two is not so difficult. From Lyon you can go to northern and southern France easily, so Geneva is well connected to both northern and southern France, and hence both the Atlantic and the Mediterranean.
Zürich (450 m/ 1350 ft) and Basel (300 m / 900 ft) are both on the Rhine water basin, and the path from them to the Rhine navigable region (the richest region in Europe) is easy. Also, to be clear, the northeastern border of Switzerland is the Rhine. The Rhine Valley is the richest region in Europe.
Switzerland is a buffer state, which has played four empires against each other for centuries (France, Germany, Italy, Austria). It leeches on them by arbitraging taxes (attracting taxpayers and tax-dodging companies from these richer countries in terms of GDP; this is why its banking sector is so big and banking secrecy was such a big deal), and by taking advantage of the fact that none of these four powers could take on Switzerland, or the other three would jump at them.
Compare this with the Himalayas: The Nepalese capital Kathmandu is at 1,500 m / 4,500 ft, and it’s surrounded by mountains that peak at 2800 m / 8500 ft. To its north, the range reaches 8,800 m / 29,000 ft, and then has thousands of square kilometers of Tibet, which is ~4,500 m / 14,000 ft high. On one side it has poor India, on the other it has what was until recently poor China. In other words, if you put Switzerland in the Himalayas, it would be poor.
Cherry-picked examples: Switzerland, Austria, and Colorado are mountainous and wealthy. The Appalachian regions of the US were historically poor despite similar geography to rich European alpine regions. This suggests that institutional and historical factors, not geography alone, determine outcomes.
Austria’s rich region is in the plains. Vienna has an altitude of ~200 m / 600 ft and is on the Danube, one of the best navigable waterways in the world.
Colorado is high indeed, but at the feet of very tall mountains (on the piedmont), a flat area, and the path eastwards (towards the rich Mississippi) is very gentle. So communication was easy there. It then quickly built railways towards the nearby passes westward, which allowed it to emerge as a hub, e.g. the Kansas Pacific Railway.
So just to clarify: The problem is not the presence of mountains. The problem is if mountains make transportation difficult. In northern regions, usually, people might establish themselves at the feet of mountains, because they’re going to get access to mountain mining plus river transportation. Meanwhile, in equatorial countries, people will live among the mountains themselves, because there the elevation is a plus, not a minus, for cooler temperatures, less disease etc. The trade-off is that it makes transportation much more expensive and conflict.
The other big concern is the opposite: Countries like India, Cambodia, Indonesia, and China all built great empires! They were very rich.
When the Europeans started their drive to conquer about 500 years ago, India and China were the richest places on Earth.
There were several very successful Southeast Asian empires, such as Srivijaya in Sumatra, Shailendra dynasty and Majapahit in Java, or Khmer in Cambodia. All of them can be considered as ‘rich’ in their respective era, some with grandiose monuments like Angkor Wat and Borobudur. All of them existed in low land very hot places.
I would say that these empires may be successful due to maritime trade. They are located in areas full of islands, and in a half way of maritime routes between east and south Asia. I would also argue that they are as successful as European kingdoms during the European middle ages (600-1300 AD).
First, none of these countries are rich today, nor were they rich in the past, in terms of GDP per capita.
I looked at the very long term GDP per capita for these countries, plus the Netherlands and the UK. There’s not much data, but around 1850 it was ~$800 in the region ($724 for Indonesia, $860 for China, $950 for India). At that time, it was 4-5x higher in the UK and NL. In the year 1000, the UK was already richer ($1,000) than this region in 1850. Data for the Netherlands starts in 1350, at $1,400. And this is all before these regions started really accumulating wealth, which is the point of the article! Europe went down for 500 years after the fall of the Roman Empire (the Dark Ages lasted broadly from 500 AD to 1000 AD), and the Agricultural Revolution that exploded the population in Europe started around 1000 AD. Technology slowly built up from 1000 AD to 1800 AD, with an explosion afterwards. These are the critical years, and I argue that this tech and wealth explosion was hard in warm regions for the reasons I shared in the previous article.
So why did they build empires? Because as long as you have a little bit of surplus, and low transportation costs, you can conquer your neighbor and extract her wealth. So yes, the Taj Mahal and Angkor Wat and Borobudur exist, but that doesn’t mean their respective civilizations were rich on a per capita basis. They just accumulated the wealth from big populations (which are perfectly compatible with low-lying warm areas).
Note that these empires require cheap transportation costs, which access to the seas provides. Whereas mountains are poor because of expensive transportation, low-lying areas are poor despite cheap transportation, because of the warmth and moisture.
In the original article, I stated that some people thought race also played a role in warm countries’ underdevelopment, without going further for obvious reasons: This is a viper’s nest.
Some commenters support this theory:
General intelligence, g, is well defined and understood by now.
Intelligence is also an evolutionary process. The phenomenon of a slow but steady increase in intelligence over generations is called the Flynn effect. This is something that is measured and observed around the world through standardized intelligence tests.
It’s not “race” that influences development, it’s IQ. I can’t avoid it in my life of living overseas in equatorial climates. IQ is by far the strongest predictor about future financial incomes, job performance, potential for criminality (or getting caught), and all-cause mortality. Basically about everything. Everything that matters and can be measured.
There are no actionable items. It’s obviously race. That’s why Singapore is rich and Sub-Saharan Africa is not.
Others disagree:
As far as I have learned, the construct/idea of ”race” was mostly promoted and used by politicians to support nationalism, based on weird ”research” done about 100 to 150 years ago. As far as I know, modern scientists are saying today that there is no evidence that supports the existence of ”races”. (E.g. real genetic differences are minimal, commonalities much bigger)
Race was not a thing in 350 B.C.E.; race as we understand it, is a 16th-century invention.
Let’s say that the most disturbing ideas about ‘race’ turn out to be true: e.g. that Ashkenazi Jews are more capable intellectually than non-Jews; that people of Chinese descent are better at math than others; that people of recent African descent are less capable intellectually. Even if these scary ideas *were* true (and I do not concede that they are): 1) a human’s value and right to be respected do not depend on their cognitive abilities. Anyone with a cognitively disabled or brain-damaged relative knows this in their bones. 2) People must be assessed individually and not as part of some group... Paraphrasing Noam Chomsky: What if people with blue eyes were 15% more likely to be bad at music? Only a fool would say, “Nah, don’t even apply, Mr Blue-Eyed Violinist. No audition for you.”
What do you think?
This is what I think—and since this is so contentious, and it’s not fundamental to my theory of mountains, it’s behind a paywall.
2025-09-25 17:23:33
Today I bring you what I think is a ground-breaking article. I have never seen this theory anywhere.1 I hope you find it as exciting as I do!
Societies that live closer to the equator are warmer. Why are they also poorer?
Here’s the average GDP per capita compared to latitude:
And here’s more quantified data:
The debate has raged for centuries with a racist undertone:
Those who live in a cold climate are full of spirit.—Greek philosopher Aristotle, 350 BC.
There are countries where the excess of heat enervates the body and renders men slothful and dispirited.—Montesquieu, The Spirit of Laws, 1750.
As we will see, a lot of the more recent academic research points at worse institutions, laziness, difficulty to sweat, lack of frost, diseases…
But there’s one theory that I haven’t seen anywhere yet, and that I think is crucial to explain the majority of this phenomenon. So today, I’d like to review what people think causes warm countries to be poorer, and then explain why this other factor is so crucial.
In Bali, me and my friends would all go into an idle state without realizing it
You just sit in cafes and restaurants (most don’t have AC there) and doing nothing, just hanging around
Then you’d enter an AC’d cafe (few), and after half an hour you’d wake up from standby mode
You have ideas again, and ambition is back
You wouldn’t even realize you get into this idle slow state but your brain goes on power save mode with the heat and you can’t even think—@levelsio
There is a ton of research that supports this, actually: People are not lazier, they’re just less productive in higher temperatures.
Each additional degree Celsius of temperature (+1ºC) shrinks GDP per capita by 8.5%! Temperature apparently explains 23% of the difference between countries’ GDP per capita.
In poor countries, a 1ºC increase reduces growth by 1.3 percentage points.2
Warmer temperatures decrease agricultural output and industrial output, and make politics unstable!
Within countries, one additional degree Celsius in a municipality reduces GDP by 1.2 to 2%.
+1ºC above 27ºC reduces the productivity of manual labor by 4% (so +10ºC → -35% productivity!)
+1ºC increases absenteeism by 5%!
Hot temperatures make people fail exams.3
A 4ºF temperature increase led to a 10% drop in performance across tests of memory, reaction time and executive functioning.
Politicians speak with lower language complexity when it’s warmer—especially older ones.
Hotter temperatures cause more crime, increase hate speech online, and make traffic tenser. Air conditioning (AC) pays for itself in prisons by reducing fights.
People sleep worse in warmer temperatures.
As I mentioned here, AC has been a crucial tool to develop the US South, and AC is the first thing Lee Kwan Yew implemented when he founded Singapore:
But although temperature might be linked to underdevelopment, what’s the mechanism? Does it make people lazier? Or is there something else?
This fascinating thread explains that warm regions tend to also be more humid.
Humidity makes warm temperatures worse for a few reasons:
Humidity grows mold, which is bad for health
When air is warm, humidity makes it feel even warmer
When humidity is 100%, the air becomes saturated and can’t take in any more, so it’s impossible for humans to cool off through sweat. The only way to cool off is by stopping physical movement.
You can see how warm-climate people might seem lazy: It’s not the people; the climate makes work nearly impossible.
The warmer the country is, the poorer it is, and the unhealthier it is.
But what’s the causality? It’s clear that warmth makes countries poorer, and obviously poorer countries invest less in healthcare and so have more disease. But as we saw in Climate Caused the US Civil War, warmth also reduces health directly, because diseases like malaria, dengue, yellow fever, tuberculosis, or parasitic worms are endemic in these regions: They thrive in warm, humid environments.4
Of course, sick people can’t work, and dead people can’t convey their knowledge to others, so diseases directly make countries poorer. More disease means more children die, and when they do, parents might be more interested in having more children (to diversify their risk) and invest less in each, making each person less productive.
Diseases thrive in warm, humid areas, but they die in frost. 5These researchers claim that frost is good to eliminate pathogens, hence the diseases they cause, with all the economic benefits this provides.
This theory is extremely contested, and I haven’t independently assessed it, so I won’t go into any detail, but for sake of completeness we must add the hypothesis that race also has influence in economic development. I might eventually make an independent assessment of the claim.
This theory goes something like: “Western powers colonized the rest of the world, exploiting its resources and leaving societies in the dirt, while becoming rich off of the spoils. Former colonies are still living the consequences of that.”
This argument is hard to sustain, because:
Some ex-colonies are much richer than others, like the US, Australia, New Zealand, etc.
Some countries reacted much better to Western imperialism than others. Japan became an imperial power itself, for example. China is quite wealthy now.
Some countries were not colonies but are as poor as their colonial neighbors. Ethiopia was occupied by Italy for 5 years only, never truly a colony, and yet it’s one of the poorest countries on Earth. Thailand has never been colonized, but it’s 40% poorer than neighboring Malaysia, a country that’s been a colony for most of its existence.
Meanwhile, hypercolonized regions with very few Westerners are among the richest regions of the world today. Taiwan has been either a jungle or a colony (to Portugal, the Netherlands, Spain, China, and Japan) for most of its history, and yet is one of the richest countries today. Singapore and Hong Kong are very similar: close to the equator, very hot, very few Europeans moved there, yet super rich.
I prefer mechanisms where you can trace the causation more directly, like crops.
We saw this in detail in Climate Caused the US Civil War: Cash crops only grow in the South but require tons of work, so this gave rise to slavery. This locked the South in a much less productive path than the North: Much more investment in slaves, less investment in capital, and the emergence of extractive institutions that were hard to replace with better ones.
The generalization of this argument for the entire world is:
Countries closer to the equator are naturally bountiful
Therefore, they develop extractive institutions, which focus on exploiting people to extract valuable things like cash crops, oil, and minerals.
To add to the problem, these resources inject so much cash into the economy that all prices rise, making other industries too expensive to develop any kind of exports, so other industries wither. These two effects are called the resource curse.6
It’s obvious that institutions matter, like in North Korea vs South Korea, or Haiti vs the Dominican Republic. In both cases, the pairs share the same geography but diverged in institutions for random historic reasons, and the economic differences in outcomes are staggering.
And of course, Europeans colonized many warm countries and left poor institutions behind. It’s easy to see how these can have kept the countries poor.
But the outliers we mentioned before are still valid: The institutions in hypercolonized Australia, New Zealand, Singapore, Hong Kong, and Taiwan are world-class, whereas those in never-colonized Ethiopia and Thailand are bad.7
Also, one of the premises sounds completely off: Are countries closer to the equator actually more bountiful?
Countries close to the equator have famously poor soils, leached by constant rains. The Amazon is impossible to turn into farmland, as are the islands of Borneo and Sumatra. Java is only productive because of volcanoes.
A bit farther from the equator, you find the horse latitudes, which are so dry they create the biggest deserts in the world across every continent.
Meanwhile, the supposedly poorly-endowed US, Canada, China, and Australia are some of the biggest mining countries in the world, and have been for some time.
The US, Canada, Russia, and Norway are some of the biggest producers and exporters of oil and gas.
The US, the Netherlands, Germany and France are the top 4 agricultural exporters in the world.
Acemoglu, Johnson and Robinson (AJR) won a Nobel Prize for proposing a mechanism by which warmer countries could have ended up with worse institutions, which goes back to disease: White people died in warm climates, so they couldn’t send people to properly colonize and develop countries around the equator, so they didn’t care about their development at all, and instead ruled through intermediaries to extract as many resources as possible.
Except Glazer et. al (2004) showed that the difference could simply have been that Europe sent more Europeans to temperate colonies, and their presence made the difference. This could be interpreted as racialism, but there are non-racialist interpretations, like “Europeans simply could transfer institutions more efficiently because they knew them better and knew how they are supposed to work” (a bit like how I believe Americans coming to Europe are more productive than native Europeans today), or “Europeans in the colonies traded more with Europe”. This counter-argument is so strong that the Nobel committee had to caveat their prize.
There are more holes to this theory, such as:
The Scramble for Africa only started in the late 1800s… Because quinine was discovered then and White people subsequently died much less from malaria! Funnily, AJR use Western mortality rates from before Europe actually colonized Africa! By the time Europe was forming African institutions, the mortality rates they used didn’t apply.8
AJR use mortality rates as proxies for institution quality, but mortality rates can also have impacts in other ways, like simply worse health.
They only compare countries with each other, but there aren’t that many countries to compare!9
Plenty of Spaniards settled in Mexico and Colombia 500 years ago, because tropical diseases are much weaker in the highlands, which is where Westerners actually settled. So White Europeans did settle some tropical countries, and yet they supposedly didn’t bring their great institutions.10
More importantly, even if this theory were right, we would be left with this causality:
Bad climate → disease → no Western settlers → bad institutions
Which means the root cause is still geographic.
If you summarize all these theories, this is what you get:
But if you take a step back, isn’t this all so weird? Didn’t humans evolve in Africa? Then how come we’re so maladapted to Africa? How can we not be adapted to the environment we evolved in?
Here’s the kicker—I’m so excited about writing this, I have a huge grin on my face right now: We did not evolve in such warm places, and humans in warm countries don’t live where you think they live!
Here are the temperatures of Nairobi (Kenya’s capital) and Lisbon (Portugal’s):
Lisbon, the capital of the first global empire of the West, actually gets warmer than Nairobi! Nairobi’s temperature is not that high, and is quite stable throughout the year. Look at Mexico’s capital, or Colombia’s capital. Look at La Paz.
The average temperature in many capitals of poor or middle-income countries is not that different from that of some Western countries. Ethiopia’s Addis Ababa is colder than Lisbon, Bogotá is colder than Madrid.
How come? Here’s a map of Italy’s topography and Italy at night. Notice where people live.
Now here’s a map of Colombia’s topography.
Can you guess where people live?
The vast majority of Colombians live in the mountains! More specifically, in the high plateaus. It’s the exact opposite of Italy—and most temperate regions.
The answer is obvious when you think about it: The higher you are, the cooler the temperature. Normally, temperatures decrease by ~4–9ºC every 1000 meters higher (2 to 5 °F/1000 ft). Since Bogotá is at 2,600 m of altitude (8600 ft), its annual temperature is 14ºC (25ºF) cooler than Barranquilla, which is farther north from the equator but at sea level, on the coast.
Bogotá was created far inland in the mountains in 1538, only a few decades after the Spanish discovery of America. The colonizers had a much harder time with disease and conflict in coastal flatlands. It was worth traveling hundreds of miles inland and up thousands of meters to survive. That region is agriculturally much better than the sea-level flatlands too, because of the same lack of disease and the soil that doesn’t get leached as much. This logic is true of all three main Colombian cities: Bogotá (12.7M people), Medellín (4.4M) and Cali (4.2M) are all in the mountains.
We’ve already seen the same phenomenon in Mexico:
Arguably, civilization would have had a much harder time developing in the Americas if the land had been much flatter and low-lying. It’s not a coincidence that the Incan Empire was a mountain empire and was the only independent one in the world to form on the equator!
Even today, the Latin American population concentrates in the Andes!
It is not just LatAm though. Here’s Africa:
Here’s a zoom in on Ethiopia, the 2nd most populated country in Africa:
Here’s Iran:
The pattern is much weaker in East and South Asia:
But if you look at the altitude and distance from the equator of the capitals of the world, a clear pattern emerges:
A big percentage of equatorial population actually lives in mountains:
The closer to the equator, the higher up the capitals! The highest capital of a developed country, Jerusalem, is just 750 m (2,100 ft) above sea level. Meanwhile, capitals of poor countries are very frequently above 1000 m.11
Higher altitude also means less humidity.
Notice how there is much less water vapor in the air in mountainous areas than close to sea level. This other dew point map is not as pretty, but shows directly how the dew point is lower in mountains.
So in tropical areas, sweat doesn’t work to cool skin on sea-level plains but still works in the mountains.
So the trend is clear that, closer to the equator, people tend to live in higher altitudes. What are the consequences of that? If you follow Uncharted Territories, you should already have a sense.
Mountains mean people need to travel up and down mountain passes and huge slopes to get anywhere. They mean no navigable rivers. They mean much higher costs of infrastructure, so there’s much less of it. This means transportation costs are much higher.
This, in turn, means there’s dramatically less trade, and so less money is made, and less wealth accumulated. We’ve seen how these facts have dramatically impoverished countries like Mexico and Brazil, and the generic process in A Science of Cities.
The other thing that happens with mountains is conflict. As transportation costs are so much higher, people don’t move as much from their valley. There’s substantially less regional integration, and people trust and like each other less. They develop their own independent customs and mistrust those of their neighbors. This leads to more conflict between valleys, regions, and countries.
This process is called Balkanization, for the mountainous Balkans in Europe. But we also see it in Mexico’s and Colombia’s cartels—in fact, nearly all cartels in Latin America are in the mountains. We saw it in Iran, a highly mountainous country that requires a very strong state suppressing dissent to keep the country together. It is extremely obvious in Africa:
And… where did humans evolve?
The pattern, and its logic, is unmistakable:
Humans evolved in the African highlands, where temperatures are stable throughout the year, and close to that of spring & fall in temperate regions. This is why we feel most comfortable there.
Close to the equator, if we’re not in the mountains, the temperatures are too high for us. We can’t think or work properly because we overheat, and our sweat can’t cool us off because humidity is too high.
We also suffer from many more diseases, more common in hot moist climates, but also because we didn’t evolve there.
This also affects food, as agriculture is much harder in these hot moist climates, given the pests, the speed of rot, and the work required by crops.
This prevented maladapted Westerners from efficiently transferring culture and institutions to these hot, humid, low-lying areas, yet another way these regions suffered.
In order to avoid all that, people close to the equator tend to live higher up, in mountains, where temperatures are cooler and the dew point is lower, allowing people to cool down with sweat when necessary.
The big tradeoff for this comfort though has been much higher transportation costs, so less trade, so less wealth.
This also leads to much more ethnic diversity.
This diversity breeds conflict, which makes everybody poorer.
Ethnic diversity and conflict also mean institutions are much harder to make and keep.
This is how mountains are the most significant underdiscussed topic in economic development, and how they must be considered to better explain why warmer countries are poorer.
So people in warm countries could pick their poison: Either be on the lowlands with lower productivity and more disease, or move to highlands with less trade and more conflict. Most of LatAm and a big chunk of Africa gravitated towards the highlands type of poverty, while East and South Asia gravitated towards the lowlands type.
This is also why one of the most important inventions in the history of alleviating poverty is air conditioning, and why all low-lying warm countries should obsess about solar energy and electrification, to power AC to increase productivity and reduce diseases.12
Why does all this matter though?
Because I’m tired of worthless debates like who is guilty of poor countries’ misfortunes? where one side claims “Oh the Western colonizers caused all the problems” and the other argues “Actually, the colonizers saved shithole countries from their shit”. Neither are useful because they’re not actionable. They focus on blame rather than on analyzing the root cause that we can do something about. If it’s true that mountains have had such a major impact on poor countries’ poverty, that clearly points at a path for their development:
In low-lying areas: Populate them with more AC and focus on eradicating diseases, especially via the elimination of mosquitoes and stagnant water.
In mountainous areas: Invest heavily in transportation infrastructure.
I asked ChatGPT and Grok about it and they agreed. I will share the links later so as not to spoil this for you!
This is huge! If your country grows at 3% per year and one year the average temperatures are 2ºC higher, growth will fall to 0.4%, or 85% less growth!
“Hot temperature reduces performance by up to 13 percent of a standard deviation and leads to persistent impacts on high school graduation status, despite compensatory responses by teachers, who selectively upward manipulate grades after hotter exams.”
Even this has an indirect relationship with economics, as rich countries have been able to eradicate malaria in a way that poor countries have not, because these diseases are easier to eliminate in colder climates, and with higher investments.
Diseases that spread in cold temperatures don’t do so because they thrive in the cold (they don’t, they die). Rather, they thrive in humans’ lungs, throats and mouths, and love the indoors. So when it’s cold, people stay indoors, and spread the virus from respiratory system to respiratory system. That’s why they’re called “cold” when they don’t like it.
Or Dutch Disease, after the Dutch discovered natural gas in the 1970s and the economy suffered from it. Spain is also a perfect example, where the vast sums of silver from America might have completely destroyed its industries for centuries.
I’ve also heard some countries inherited reasonably good institutions, like Namibia from Germany, but I haven’t looked at it independently in any detail.
Also, these mortality rates were linked to military campaigns, not civilian settlement. Many of the observations were from just one instance.
They used about 60, and the max I’ve seen is about 140. This is a fair share of countries (~196) but there are just so few countries in the world that it makes it hard to reach significance just comparing countries.
At this point, AJR argue that Spanish institutions were just not great to begin with, and explain how they just replaced extractive institutions that existed before they arrived. But then why were Spanish institutions so bad compared to English ones? And why did the English ones suddenly become bad institutions in the South of the US but not in its North?
Ulaanbaatar, in Mongolia, is extremely high for its latitude, which is why it’s the coldest capital on Earth. La Vella, the capital of Andorra, is higher than Jerusalem or Madrid, but Andorra is a microcountry that is only rich because it’s nested between France and Spain.
2025-09-24 20:02:52
All the principles we’ve seen in the previous two articles shape how to make a city great. Adding a couple more can tell us an inordinate amount on how to make cities amazing to live in.
Transportation costs are paramount. Cities must do everything they can to minimize them.
This is especially true for the main transportation …
2025-09-19 22:02:58
In our previous article, A Science of Cities, we uncovered the big forces that determine population density, how people gathered in villages, and how some of those villages grew more than others. These forces are food productivity, agglomeration effects, and transportation costs. Today, we’re going to see how these forces, plus a few more, determined which cities grew and which ones remained small. Next, we are going to see how cities are structured inside.
The regional productivity of the land will determine the average population density: The more fertile the land is, and the better the technology to extract food out of it, the more food will be available and the more the population will grow. As we saw in Pax Mercatus, inventions like the heavy plow, the horse collar, horseshoes, and horse breeding brought an agricultural revolution to Northern Europe that exploded local population, and that led to the emergence of cities.
The number of people who can live in cities will be determined by the food surplus. For example, if every person can only produce enough food to feed themselves, everybody will be a farmer. But if every farmer only uses half of their harvest, the other half can feed non-farmers, and so 50% of the population will be able to do other work, usually better done in cities. In other words, the food production surplus determines the share of urban population, up to about 80% city dwellers.1
But how does this food reach the cities? In A Connected Place, we discussed how cities were realistically structured:
Notice how there’s plenty of farmland inside the city walls. Outside the walls there was more.
We saw in that article that the simplified model was this:
The food that must be consumed soon after production had to be produced within the city or close by.
Some forest land had to be close by too, because wood is heavy, so transporting it is expensive.
Farther out, grains, since they don’t spoil. They can be transported slowly and don’t need refrigeration.
Farther still, ranching, as cattle can move by foot.2
In this structure, farmers in the periphery sell their grain surplus to the city, which is one of the reasons that surrounding villages can’t be too big: They must produce a heavy surplus to feed the city, so they can’t have too many hands per farm.
But as we discussed, transportation costs had a prominent role: They were so high that they could quickly make any product prohibitively expensive. And as you might know by now if you read Uncharted Territories frequently, river transportation costs could be 10-30x cheaper than overland.
The easier the river transportation, the faster boats could travel and bring food from faraway villages. This is why Ancient Egypt’s capitals were so rich, harvesting all the farming surplus of the entire Nile.
This is why all the earliest civilizations emerged along rivers, first as cities, which then conquered or allied with more and more land and other settlements along the same rivers.
One way to get a sense of this is through “isochrones”:
The confluence of rivers increased the influence area.
And this is also why rivers were better than coasts.
At a macro level, coastal cities allowed the emergence of big empires (and thus huge capitals). This is why the Roman Empire was called Roman (from the city of Rome) and why both Rome and its empire were so big: The Romans used the Mediterranean (Mare Nostrum, “our sea”) as a highway to transport grain from across the empire (notably Egypt). Its roads had the same effect.
Why gather in cities though? We mentioned in the previous article why people bundled in villages, but why get together into bigger groups?
There’s a clue in the paintings of Padova and London I showed before.
Of all the existing cities I know that were formed centuries ago, virtually all of them are in a highly defensible spot:
London was on a hill on the Thames. Other cities along a river with a fort on a hill include Athens, Carcassonne, Salzburg, Budapest, Prague…
Byzantium / Constantinople is at the end of a rocky peninsula, like San Francisco.
Pittsburgh and Lyon are on a hill at the confluence of two rivers.
Cairo (and all of Egypt) are protected on three sides by desert, and by sea on the 4th. The same was true of the early Indus Valley civilization..
Mexico was on a lake surrounded by mountains
Rome was on hills close to the Tiber river, in a marshy and malaria-prone area
Moscow was ideally suited to defend against the steppe hordes.
Many of the cities we know today in Europe and around the Mediterranean were founded by Romans first as military bases, and only after did they become cities. This suggests the more general mechanism:
Villages were attacked by neighbors or foreigners
They would pack into bigger towns to wall them and protect themselves3
Those towns that could protect themselves the best were more likely to survive and attracted more people, eventually emerging as big cities
Many of these cities were on rivers because of the protection, the water for drinking, for irrigation, to source food from farms along the river… And from trade.
In Why Some Cities Thrive, we covered the main mechanisms of how ancient cities grew:
They tended to start as military centers
Which transformed them into administrative centers
For protection, food, water (drinking and irrigation), and transportation speed, they tended to be on rivers
The ones that were on the best parts of rivers (navigable waters at the confluence of rivers or at their mouth) grew much faster than the others
In other words, the key factor that made a city grow a lot was being at the crossroads of cheap transportation lines. We see this in virtually all the cities I’ve covered.
So the ideal city is a village that happens to be on the confluence of several calm, navigable rivers, on an estuary close to the coast, with a ford to cross the rivers, and near a natural road that connects important points.
What’s a natural road? A line that quickly connects one important city to another through pretty flat terrain. You can see for example how many of Spain’s modern roads are close to where old Roman roads were:
Locations at line crossings evolved into marketplaces, which generated wealth that could pay for the grain and infrastructure needed to continue feeding them.
I explained how valuable rivers were for this process in Starship Will Change Humanity Soon:
Imagine you sell meat and can make a profit of $10 for each kilogram you sell. But it costs you $1 to transport each kg one kilometer. Each additional kilometer you add, your margin is reduced by $1. You can only transport your product 10 km away. In the example below, that means you can only trade with four cities:
If instead, your cost of transportation is half of that, what happens? It costs you $0.5 per km. Now you’re increasing your margins with each of the cities that you trade with. But more importantly, now you can reach markets that are 20 km away.
But when you 2x the distance, you 4x the surface! In this case, you can’t just trade with four cities anymore, you can trade with sixteen2! But according to Metcalfe’s law, the value of a network grows with the square of its nodes. Because now it’s not just your city that can connect to these sixteen other cities. Each one of these cities now can connect with sixteen other cities! All of them become richer, which means they, too, can now buy more meat.
This is what rivers do: By dropping the cost of transport, they connect huge numbers of cities, which can trade much more between them, become wealthier, their population can buy even more, and so on and so forth.
All in all, the value of the network to the right is at least an order of magnitude higher than that to the left! The cheaper the transport, the more trade at a lower cost, the more wealth generated, the more that wealth can be reinvested in better canals and bridges and roads, and the area’s wealth grows even further.
To use a concrete example, imagine the costs of $1 of woolen cloth. $0.30 could have been for getting the wool, $0.30 for converting it into cloth, and $0.40 for transportation. Let’s assume that, to make a profit, it is sold for $1.20. Of the $0.20 of profit, $0.15 goes toward the trader’s living costs, so he can save $0.05.
Now halve the transportation cost. Suddenly, the average profit rises to $0.40, and after living costs, the trader can save $0.25, or 5x more than before!4
But as we have seen, this also expands the market. Now the trader can cover 4x the area, so he will be able to sell 4x more cloth, so he will make $1 where before he was only making $0.05! Of course, this also increases by 4 the amount of wool production.
Or maybe more, because competition will bring prices down, which will increase demand. This competition emerges because more people see a profit to be made in wool trade. And they will sell their product wherever someone else is already selling it—to benefit from existing customers. The added variety will attract new customers, who will attract more sellers.
Soon, dyers will also come to dye the cloth with beautiful colors. Designers will innovate the cuts. Weavers will start co-locating in the same city, because that way they can see what sells, and they can make those types of clothes. Button makers will also settle nearby, to sell their buttons to clothmakers. Boats will specialize in carrying wool and cloth, making that trade more efficient. Soon, you have an entire industry that co-locates into the same city because of the economies of agglomeration.
