Why Nations Fail

Why Nations Fail

The Origins of Power, Prosperity, and Poverty

Book - 2012
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Brilliant and engagingly written, Why Nations Fail answers the question that has stumped the experts for centuries: Why are some nations rich and others poor, divided by wealth and poverty, health and sickness, food and famine?

Is it culture, the weather, geography? Perhaps ignorance of what the right policies are?

Simply, no. None of these factors is either definitive or destiny. Otherwise, how to explain why Botswana has become one of the fastest growing countries in the world, while other African nations, such as Zimbabwe, the Congo, and Sierra Leone, are mired in poverty and violence?

Daron Acemoglu and James Robinson conclusively show that it is man-made political and economic institutions that underlie economic success (or lack of it). Korea, to take just one of their fascinating examples, is a remarkably homogeneous nation, yet the people of North Korea are among the poorest on earth while their brothers and sisters in South Korea are among the richest. The south forged a society that created incentives, rewarded innovation, and allowed everyone to participate in economic opportunities.

The economic success thus spurred was sustained because the government became accountable and responsive to citizens and the great mass of people. Sadly, the people of the north have endured decades of famine, political repression, and very different economic institutions--with no end in sight. The differences between the Koreas is due to the politics that created these completely different institutional trajectories.

Based on fifteen years of original research Acemoglu and Robinson marshall extraordinary historical evidence from the Roman Empire, the Mayan city-states, medieval Venice, the Soviet Union, Latin America, England, Europe, the United States, and Africa to build a new theory of political economy with great relevance for the big questions of today, including:

- China has built an authoritarian growth machine. Will it continue to grow at such high speed and overwhelm the West?

- Are America's best days behind it? Are we moving from a virtuous circle in which efforts by elites to aggrandize power are resisted to a vicious one that enriches and empowers a small minority?

- What is the most effective way to help move billions of people from the rut of poverty to prosperity? More philanthropy from the wealthy nations of the West? Or learning the hard-won lessons of Acemoglu and Robinson's breakthrough ideas on the interplay between inclusive political and economic institutions?

Why Nations Fail will change the way you look at--and understand--the world.
Publisher: New York : Crown Publishers, c2012
Edition: 1st ed
ISBN: 9780307719218
Branch Call Number: 330 A173w 2012
Characteristics: xi, 529 p. : ill., maps ; 25 cm
Additional Contributors: Robinson, James A. 1960-


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Sep 24, 2016

Outstanding book. I listened the audio book then had to get the print copy out to read. A fascinating overview of economic and political history and a sound argument of why some countries are poor and why some are rich. I think the comment by the previous reader was a valid one although the influence of religion is mentioned in the book. One thinks of the Muslim Brotherhood in Egypt as an example where religious doctrine repressed pluralism after the Arab spring in Egypt hence resulting in a military coup and a continuation of the graft and corruption that keeps Egypt poor relative to the west. As Acemoglu and Robinson states pluralism and a level playing field is needed for the economic institutions to develop that will return foster development and prosperity. It makes me think where the USA is at the moment with the slow progression towards accumulation of wealth and power with the elites and the decline of the middle class. Could it be in 50 years the US dramatically slips down the list of rich countries due to the corruption of political institutions in that country. As the writer in the book states nothing is immutable, history is not preordained. A compulsory read for anyone who wants to understand how politics and economics, power and prosperity are so closely intertwined.

Aug 18, 2016

This is very good. See the other comments for a discussion of the basic argument.

I have 2 issues. The first, and minor one, is that it is probably a little too long. The essential concept is pretty straightforward. The illustrative examples are interesting, but you get the point pretty quickly.

My second issue is that to discount the role of religion in forming inclusive or extractive hierarchies is a mistake. Religion has a massive impact on how societies function and develop (or not). I think the authors were trying to be a little too PC here which is laudable but, in this case, an error.

Jul 13, 2016

[I originally wrote this for my blog. It is crossposted there.]

The authors of Why Nations Fail dichotomize economies into two basic types: extractive and inclusive. In extractive economies political institutions try to extract as much wealth as possible from the populace. In inclusive economies laws are crafted to distribute wealth in proportion to contributions to the economies. So someone who contributes a great deal would receive a great deal. In an extractive economy all the gains go to the elite. At first an extractive economy can be successful but over time there is little incentive for the vast majority of the populace to do any more than the bare minimum necessary to survive because all the extra gains will inevitably just go to the elite.

What makes the book so poignant to me reading it now is that a big part of what makes a nation inclusive is an ascendable and descendible socioeconomic ladder. In his January 18, 2014 blog post economist Robert Reich wrote:

"…America’s shrinking middle class also hobbles upward mobility. Not only is there less money for good schools, job training, and social services, but the poor face a more difficult challenge moving upward because the income ladder is far longer than it used to be, and its middle rungs have disappeared."

It does seem that the middle rungs are disappearing. The middle rungs Reich mentions are "good schools, job training, and social services." To those I would add good public libraries, affordable good universities and healthcare, access to a neutral Internet/information and a justice system that works well for everyone. Without those middle rungs it becomes very difficult for anyone to climb the ladder.

According to Acemoğlu and Robinson when the ladder no longer functions, in time even the very rich become poor, because plutocrats are not rich in isolation. Their wealth is built on a foundation of comprised of everyone else in the society. The socioeconomic ladder forms not only a means of vertical movement, it is also a means structural support for the higher levels. Without that structural support, most of the populace stops innovating and just does what is essential to survive. Eventually the entire economy falls apart and the nation fails.

A couple of good books to read along with Why Nations Fail are Winner Take All Politics and The Unwinding: An Inner History of the New America.

May 17, 2016

A very long read, but a very good read. Acemoglu and Robinson team up again to provide one of the best and most renowned critiques of modern development theory today. It is not, geography, culture, the environment, or resources that cause poverty, it is human institutions themselves. The authors do well to show how different institutions (and different histories) provide different levels of development, but they somewhat interestingly don't go far enough into the structural issues that create these types of institutions. It's not enough to say "corruption" or "(plutocracy)/autocracy". There is corruption, autocracy, or plutocracy in even the most developed countries of the world. The rosy picture doesn't end there. Even in the most advanced nation in the world there is high levels of poverty and inequality, at times worse than those in the Global South. So, while this book is a great read for anyone interested in development, one has to ask, what social institution really makes all the difference? Is it political, or is it economic, or is it perhaps ideological?

Jul 03, 2013

Well written. Well developed characters. Very enjoyable historical novel

May 14, 2013

This is a fascinating read for a number of reasons: the use of historical evidence to prove the authors hypothesis; the drawing of inferences from a variety of countries, cultures, peoples and the clear way it seems to fall together. In the main though, this work can relate to modern times quite easily. Canada can be seen as an extractive economy, whether we change is still questionable. But stagnation and proverty abound, Why are there so few top people? Anecdotal examples:. Contracts not upheld, criminals not tried, opportunity denied, rights abrogated, select individuals chosen to act for the leadership (senators for the PM), candidates attempt bribes of voters with 'goodies" (see labrador election). Even though Canada is viewed as one of the inclusive ecoomies, there are enough real life anamolies to make one wonder. Canada is a failed nation by this books' assessment, even if not by its admission.

steverenko Jan 04, 2013

This book is magnificant in its approach to the real history, what really happened out there as compared to what I was taught in school. I have rewritten my opinions what history was then.

Aug 07, 2012

I am not an economist, so this book was fascinating to me. I agree with the fist reviewer that it got a little repetitive in the last part (I started skipping a little bit); but overall it was a enjoyable and informative book, successful in it's ambitious presentation.
The main topic is addressed right away, about how a country's future is determined by either extractive or inclusive systems of government. In the first one the rulers control people's lives and do not allow them to either contribute to the well-being of the society or innovate with their talents. They even punish people for their physical and intellectual properties. In the inclusive society people's property and intellectual rights are safe; people are valued for their talents and contribution to the society.
A big issue is innovation, also called creative destruction, that leads to progress and well-being of the whole nation.
I liked the way the authors developed the theme through historical examples from all continents, from ancient history to 2011. Also, very informative section went over why other theories haven't worked. At the end the authors provided some ideas how to help poor countries with extractive governments to start on more inclusive path.

Jun 22, 2012

The central idea of this book is built around the role of institutions (extractive or inclusive) and politics and their influence on how economies grow or fail.

The book is most compelling when it rips apart contemporary theories of development. It's failure is how it addresses the question: so what? It's a book filled with interesting historical insight, without much in the way of a 'therefore'. It feels incomplete.

I also found the book rather repetitive. 500 pages could have been condensed into a much more readable 200 pages.

Still, the sweeping analysis and sharp insights are worth a read. And after putting the book down, I do find myself thinking about the points raised in it.


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