When I looked at a world map of coal usage, it really stood out to me that India and China are the leading users. That seems broadly true. In contrast, coal use in Europe and the United States looks much lower, which makes sense—they have nuclear power, and they’re wealthy enough to rely heavily on natural gas, often imported from oil- and gas-rich regions. That said, the U.S. did use coal heavily in the past to industrialize.

I noticed something similar in the Middle East and Russia. Coal use for electricity is low there too, which is understandable because they have large domestic reserves of oil and natural gas. But what surprised me was Africa. Coal usage there also looks low, and that didn’t immediately make sense.

The explanation, I think, is that electricity use itself is much lower in large parts of Africa. In fact, there are regions where people live with little or no access to electricity at all. So low coal use there doesn’t mean cleaner energy—it often means energy poverty.

Looking at this more historically, it seems clear that today’s rich countries once relied heavily on coal. That suggests a pattern. Countries tend to become wealthy in one of two broad ways.

First, some become rich by having valuable fuel resources at home, like oil and gas in the Middle East or Russia.

Second, others become rich by using fossil fuels—historically coal—intensively to build infrastructure, which then becomes self-sustaining and generates income through things like manufacturing, technology, services, and the attraction of skilled people. That’s what happened in the U.S. and Europe, later in Japan, and more recently in China—and what India is in the middle of doing. Africa, for the most part, hasn’t yet gone through this phase at scale.

But fuel alone is not the full story. It’s really fuel plus organization—the philosophy of governance, institutions, and coordination that shape how a society functions. India is a good example of this tension. It uses a lot of energy, but it has relatively weaker institutional organization and execution compared to Europe, the U.S., or Japan, which benefited from strong administrative traditions and founding principles.

That may help explain why India, despite its immense energy use and population, doesn’t show the same level of visible transformation as China. China selectively adopted Western-style organizational and urban-planning principles—even without adopting Western political or civil institutions—and built very high state capacity for execution. So India’s slower development relative to China reflects differences in state capacity and organizational effectiveness, not simply differences in energy use.

Zooming out, this leads to a more general way of thinking about how countries get rich. At least in capitalist or mixed economies, the pattern seems to look something like this:

Better value generation → more private wealth → more government revenue → better public infrastructure and planning, provided each step is connected efficiently and friction is low.

Each link in that chain has its own kind of friction.

Between value generation and private wealth, friction is reduced by how effectively private companies operate—management quality, competition, technology, and productivity.

Between private wealth and government revenue, friction is reduced by how much visibility, enforcement, and traction the state has over economic activity—tax enforcement and compliance.

Between government revenue and public infrastructure, friction is reduced by more intangible factors—culture, norms, ethics, and philosophy—which then shape very tangible things like institutional design, avoidance of corruption, bureaucratic effectiveness, and how citizens relate to one another and to the state.

At this point, though, it’s important to clarify what “value generation” means in an economic sense, and what it does not mean. I think economists will agree when I say that value generation by an individual should not be confused with the intrinsic value of a human being. The intrinsic value of individuals is equal across all humans and is not something economics measures at all. That's why human rights and dignity don't depend on how rich you are or where you are from.

Nor does competence automatically imply economic value generation. One can easily imagine a genius philosopher or mathematician who produces little or no market-valued output, while a real estate agent may generate far more measurable economic value—even if the philosopher is widely regarded as more competent or intellectually impressive.

In that sense, there are three distinct and non-overlapping concepts that apply to individuals. First is intrinsic human value, which is the same for everyone. Second is competence, which varies across people depending on interests, background, education, and training. Third is economic value production, which may or may not depend on competence and is primarily determined by economic demand and by what an individual has or can produce within the environment they are embedded in.