Why Nation Fail Flashcards
Each society functions with a set of economic and political rules created and enforced by the state and the citizen collectively
Daron Acemoglu & James Robinson
1) Economic institutions shape economic incentives;
2) it is the political process that determines what economic institutions people live under, and it is political institutions that determine how this process works.
Daron Acemoglu & James Robinson
Most economists and policymakers have focused on “get it right”, while what it is really needed is an explanation for why poor nations “get it wrong”.
Daron Acemoglue & James Robinson
A few common wrong hypothesis to explain inequality between nations
1) Geography hypothesis (eg Jared Diamond)
2) Culture hypothesis (eg Max Weber - Protestant ethics)
3) Ignorance hypothesis (eg Lionel Robbins)
Creative destruction
Joseph Schumpeter
Fear of creative destruction is often at the root of the opposition to inclusive economic and politic institutions
Daron Acemoglu & James Robinson
Turning points:
1) England - 1688
2) French Revolution - 1789
3) Rome - 49 BC
1) Glorious Revolution:
William & Mary - changed from Absolutist Monarchy to Constitutional Monarchy, which gave the power to Parliament to install inclusive political and economical institutions
2) French Revolution:
Overthrown Lions XIV and ascend of Napoleon. The following conquers by Napoleon in Europe was to some extent a spread of French Revolution to other European extractive societies.
3) Julius Caesar:
Change from Roman Republic to Roman Empire, leading to more extractive institutions and eventually to the decline of West Roman Empire
Virtuous circle of Inclusive economic and political system works through 3 mechanism:
1) rule of law
2) supported by inclusive economic system with broad base
3) free media
Iron law of oligarchy:
Of all hierarchical organization, they will reproduce themselves not only when the same group is in power, but even when an entire new group take control
Robert Michel - German sociologist
Why can Glorious Revolution and French Revolution break the Iron Law of Oligarchy?
1) having a new class of merchants and businessmen wishing to unleash the power of creative destruction;
2) nature of broad collation instead of a narrow group of special interests;
3) tradition of power sharing (Magna Carta - England; Assembly of Nobles - France)
To build an inclusive institution:
1) empower a broad cross-section of society (Pluralism)
2) some degree of political centralization - to exercise law and order;
3) free media
