Why Nations Fail: The Origins of Power, Prosperity and Poverty
(2012)
Daron Acemoglu & James Robinson
What do people in poor countries desire most? This book begins with quotes from some of the young protesters who helped bring down the Mubarak regime in Egypt. The authors try to untangle what they were after. The software engineer and blogger Wael Khalil, one of the movement’s leaders, made a list of twelve things that he wanted to change. Rather than issues like higher wages and lower prices, all the demands were political. Egypt’s economic malaise as a direct result of the monopolization of politics and political institutions by an elite. If this didn’t change, nothing else would - including the economy.
Putting politics first might seem obvious, authors Acemoglu (economics, MIT) and Robinson (political science, Harvard) note, but professors and pundits usually put forward other explanations for a country’s failure. In Egypt’s case these would be: 1) geography – its lack of water and arable land inevitably has held it back, compared to more verdant places 2) culture – Egyptians lack the proper work ethic to succeed, and the Islamic beliefs of the people are inimical to economic success; 3) its leaders have made one bad decision after another, and if it had been better managed and ruled, it would be a lot better off by now.
The protesters have it right, the authors argue, and the experts are wrong. Whether it is Egypt, Sierra Leone, Zimbabwe or North Korea, the poorest countries have much in common. They have elites that have seized full political power and looted nearly all the wealth, drying up opportunities for advancement and prosperity for the mass of people. By contrast, successful, rich countries tend to have political rights that are broadly distributed, governments accountable to citizens, and economic opportunities open to all. The key difference between rich and poor countries, Why Nations Fail argues, is that their institutions provide different incentives for individuals and businesses. These incentives are provided by economic institutions, but they rest on political laws and rules.
The argument of the book is not necessarily new (De Toqueville wrote “I have no doubt that the democratic institutions of the United States… are the cause of the prodigious commercial activity of the inhabitants.”), but the evidence the authors amass seems incontrovertible. Brilliant chapters on the early years of the American and Australian colonies and potted histories of Latin America, the French Revolution and Napoleonic Wars, Congo, Botswana, and the greatest extractive state of modern times, apartheid South Africa, are joined with vivid descriptions of contemporary kleptocracies including Zimbabwe (President Mugabe once ran a national lottery, and his name was pulled out of the barrel as the winner) and Uzbekistan, run by a single family and the perfect example of crony capitalism. This is contemporary political economy writing at its best.
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(2012)
Daron Acemoglu & James Robinson
What do people in poor countries desire most? This book begins with quotes from some of the young protesters who helped bring down the Mubarak regime in Egypt. The authors try to untangle what they were after. The software engineer and blogger Wael Khalil, one of the movement’s leaders, made a list of twelve things that he wanted to change. Rather than issues like higher wages and lower prices, all the demands were political. Egypt’s economic malaise as a direct result of the monopolization of politics and political institutions by an elite. If this didn’t change, nothing else would - including the economy.
Putting politics first might seem obvious, authors Acemoglu (economics, MIT) and Robinson (political science, Harvard) note, but professors and pundits usually put forward other explanations for a country’s failure. In Egypt’s case these would be: 1) geography – its lack of water and arable land inevitably has held it back, compared to more verdant places 2) culture – Egyptians lack the proper work ethic to succeed, and the Islamic beliefs of the people are inimical to economic success; 3) its leaders have made one bad decision after another, and if it had been better managed and ruled, it would be a lot better off by now.
The protesters have it right, the authors argue, and the experts are wrong. Whether it is Egypt, Sierra Leone, Zimbabwe or North Korea, the poorest countries have much in common. They have elites that have seized full political power and looted nearly all the wealth, drying up opportunities for advancement and prosperity for the mass of people. By contrast, successful, rich countries tend to have political rights that are broadly distributed, governments accountable to citizens, and economic opportunities open to all. The key difference between rich and poor countries, Why Nations Fail argues, is that their institutions provide different incentives for individuals and businesses. These incentives are provided by economic institutions, but they rest on political laws and rules.
The argument of the book is not necessarily new (De Toqueville wrote “I have no doubt that the democratic institutions of the United States… are the cause of the prodigious commercial activity of the inhabitants.”), but the evidence the authors amass seems incontrovertible. Brilliant chapters on the early years of the American and Australian colonies and potted histories of Latin America, the French Revolution and Napoleonic Wars, Congo, Botswana, and the greatest extractive state of modern times, apartheid South Africa, are joined with vivid descriptions of contemporary kleptocracies including Zimbabwe (President Mugabe once ran a national lottery, and his name was pulled out of the barrel as the winner) and Uzbekistan, run by a single family and the perfect example of crony capitalism. This is contemporary political economy writing at its best.
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