How the World's Richest Country Bankrupted Itself

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How a tiny Pacific island became the world's richest country, only to lose it all.

– Contents of this video ----------------------------
0:00 The Nation that Lost Everything
4:44 A Not So Pleasant Island
7:52 A Stinky Discovery
9:30 Turning an Island into Fertilizer
13:06 The Richest Country on Earth
16:35 How to Bankrupt a Country
22:27 The Prison Colony’s Prison Colony

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– Sources used ---------------------------------------
Connell, J. (2006). Nauru: The first failed Pacific State? The Round Table, 95(383), 47–63. doi:10.1080/00358530500379205

#Economics #History #Nauru #CasualScholar #EconomicHistory #NauruHistory #WorldsRichestCountry #Resource Curse

[Mark.Harrington]

I went to Nauru on a ship in 1978, delivering 1500 tonnes of fresh water and then loading 35, 000 tonnes of phosphate. Four of us the boat ashore to look around and whilst walking along the road a local passed by and offered us a drive round the island.
I was 20 at the time and it seemed like a paradise, now 45 years later, I'm feeling sad for Nauru.

[KPW]

I still remember reading a newspaper in the early 90s about Nauru, the wealthiest nation and the wealthiest island in the world.
It's insane how it changed within such a short time.

[Kyrephare]

I remember learning about this place like 20 years ago in college when a class when it was brought up in a class discussing the rush for Guano (phosophrus ore) in the Pacific in the mid 1800s. By that time, it was thought they were going to take their sovereign wealth fund and just move off the island back then, but no one knew how badly they botched fund. Our professor basically put it like this: They sold of their own island, piece by piece, until there was virtually nothing left.

[davidnelson]

I lived in Palau in the early 1980s and went to school in Singapore. One time, the school scheduled a flight on Air Nauru. My dad told them, "Absolutely not!" It was well known that you could get stranded or have very delayed flights if you flew on Air Nauru. One time the president's wife forgot her purse and the plane turned around and went back to get it when they were nearly to their destination. I sure would have been ticked off to almost be to my destination only to be turned around and flown back to where I started.

Thank you for a great overview of the history of Nauru.

[raditts]

"In the end, the government of Nauru learned absolutely nothing from their mistakes."

[svenlima]

I feel pity for the people of Nauru. The elders were greedy and the children will live in poverty on a destroyed island.

[OneMoreTank]

I was thinking they could have used a portion of the profits from the phosphate to refurbish the depleted land as they went. Ships could leave with the phosphate, and instead of coming back empty, come back with topsoil. Topsoil would cost a tiny fraction of what the phosphates sold for but would have enabled them to start cultivating the land. That way they wouldn't have been dependent on outside food and would have gradually restored the tourism value of the island.

That's just one idea. Regardless of the specifics, I think they really ought to have invested into developing the island rather than dumping money into foreign assets.

[paragkale]

I remember reading in the mid 1970s about Nauru being the richest country in the world. It was with its investments that a phosphate refining plant was set up in Paradip on the east coast of India. A few years later I read that Nauru is running out of phosphate and has decided to demolish the president's official residence so that it could be mined from the grounds below. I also read of wasteful habits of the government that had crippled the economy. The writing was on the wall. It was just a matter of time before the once prosperous nation became bankrupt. It is truly a moral lesson to all humanity.

[TexRex]

When I heard the intro saying this used to be the world's richest country but it was also a tiny island I asked myself "Is this about bird poop island." 8 minutes later: "Yeah, it's bird poop island."

[yutakago]

The moral of the story is that wealth build on bird poo will not last long. However, wealth build on human talent will last longer.

[chriscarey]

It's a shame no one had the foresight to include in the mining contract a clause to require the developers to import top soil to restore the land as they worked, run those ships loaded both ways. Perhaps they couldn't restore all, but much could have been put back to gardens/farms/Forrest.

[kallebirgersson]

The polar opposite to how Norway manages its oil revenue

[nimblehuman]

I went to International School Manila in the 1980's. Right next to our school in Makati was a skyscraper called the Pacific Star, whose logo was the same bright star as on the flag of Nauru. We used to joke that one could arguably fit all Nauruans in that one tower. I remember seeing the arc welders high up in the tower while it was under construction.

[beveG]

After writing 120 pages on Nauru's economy. I'll have a few comments here.

1- great video, always a pleasure to see someone tackling this unbelievable subject
2- population displacement was always an idea in the colonial mind. Many official studies states that after the phosphate mining, the island would probably be too destroyed to live on. You can find these kind of statements from the 1920's to the independance. To be fair, the colonial inheritance is huge in Nauru economic history. The social structure of the island wasn't prepared for colonial extractivism, and colonial powers (mainly Australia) never planned to leave an habitable island as it was "too costly". My thesis final point is that colonial powers and their absence of economic diversification are the original flaw.
3- Nauruans actually never went to school, if you're paid for living, why bother ? Most Nauruans were employed by the government, as in Saudi Arabia. But they also never worked the phosphate themselves. Most skilled labor was Australian, and cheap work was imported in the form of fidjians or philippinos. Because of that, Nauruans never really learned by doing. At the crises the population was too unskilled to get any job outside of Nauru.
4- an other interesting point is that Nauru is now the leading country sponsoring deep sea mining in the CCZ. They already asked the ISA for authorization, that is technically approved after the end of the 2 year rule last July. The rent economy mining is still in the minds of nauruans, because that's what they did for the last century. When you look at it, Nauru's economic history is a lock in, in rent economics. When phosphate rent disappeared, they looked for finance rent, then human rent, and now deep sea mining. And this lock in is born because of the Australian colonial power.

5- last but not least, Nauru is archetypal case of a natural resources mono economy, an ecocide and a state failure, but you can find most of their mistakes in a lot of countries such as Saudi Arabia, Brazil, East Timor, Algeria, Russia and even Norway ! Don't blame Nauruans too harshly.

Thanks to those who read all of this, and once again thanks for the video !

[MrWyzdum]

The sad cycle is that some people are in a rich country and think, "it won't hurt them if i skim some off this off", then when things go bad people think, "this place is screwed no matter what i do, so i might as well get rich off them. Besides if i don't rob them, someone else will."
And so goes the world.

[boomie]

This should be a lesson for us all. The earth is an island and it's heading in the same diredtion.

[foxyninjaa]

This feels like when you mess up a game of Tropico

[WhateverNameIsStillAvailable]

Holy crap! This story is biblical. Nauruans lived in heaven for decades and they could have kept living in heaven for eternity if it wasn't for a handful of corrupt and selfish people. I feel like there is an important lesson in this. Don't let infinite wealth lul you to sleep. Always be on the lookout for evil and don't turn a blind eye to corruption just because "things are going relatively well". I see this in my own country (Belgium) too. We are so mismanaged, we face bankruptcy but people have been playing it down, not worrying when our politicians are clearly lunatics. People in decadent societies are completely and absolutely insane! It's like they don't want a future for their people and offspring.

[me]

First Josh Brett, and now you. You've both done great work to cover this island's plights from different angles. Well done!

[Centristlol]

I often wonder why countries like Nauru even bothered with independence. The writing was surely on the wall that phosphate was a poisoned well.