“Why Nations Fail: The Origins of Power, Prosperity, and Poverty,” by Daron Acemoglu and James Robinson
Daron Acemoglu and James A. Robinson – the authors of “Why Nations Fail” – attempt to explain the gut-wrenching poverty that leaves 1.29 billion people in the developing world struggling to live on less than $1.25 a day … the average American is seven times as prosperous as the average Mexican, 10 times as prosperous as the average Peruvian, about 20 times as prosperous as the average inhabitant of sub-Saharan Africa and about 40 times as prosperous as the average citizen of such particularly desperate African countries as Mali, Ethiopia and Sierra Leone.
What explains such stupefying disparities?
The authors’ answer is simple: “institutions, institutions, institutions.”
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Many societies have done well for a while — until powerful people get out of hand. This is an easy pattern to see at a distance and in other cultures. It is typically much harder to recognize this pattern in your own society, nation. Why is that?
Because it is much easier to see the faults of others than it is to see our own. It’s human nature… an all too common bias.
Daron Acemoglu, Elizabeth and James Killian Professor of Economics at MIT, delivered the 26th Annual Henry George Lecture. The lecture is sponsored by The Department of Economics and Finance.
It is among the grandest topics in scholarship: Why do some nations, such as the United States, become wealthy and powerful, while others remain stuck in poverty? And why do some of those powers, from ancient Rome to the modern Soviet Union, expand and then collapse?
From Adam Smith and Max Weber to the current day, scores of writers have grappled with these questions. Some scholars, like Weber, have argued that religious or cultural differences create vastly different economic outcomes among countries. Others have asserted that a lack of natural resources or technical expertise has prevented poor countries from creating self-sustaining economic growth.
Economists Daron Acemoglu of MIT and James Robinson of Harvard University have another answer: Politics makes the difference. Countries that have what they call “inclusive” political governments — those extending political and property rights as broadly as possible, while enforcing laws and providing some public infrastructure — experience the greatest growth over the long run. By contrast, Acemoglu and Robinson assert, countries with “extractive” political systems — in which power is wielded by a small elite — either fail to grow broadly or wither away after short bursts of economic expansion.
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Daron Acemoglu explains how inequality threatens the United States and why we will overcome it.