|
9230483
|
It is not that Argentinians are just naive and think that Juan Peron or the more recent Peronist politicians such as Menem or the Kirchners are selfless and looking out for their interests, or that Venezuelans see their salvation in Chavez. Instead, many Argentinians and Venezuelans recognize that all other politicians and parties have for so long failed to give them voice, to provide them with the most basic public services, such as roads ..
|
|
|
Daron Acemoğlu |
|
12bb644
|
Extractive institutions that have achieved at least a minimal degree of political centralization are often able to generate some amount of growth. What is crucial, however, is that growth under extractive institutions will not be sustained, for two key reasons. First, sustained economic growth requires innovation, and innovation cannot be decoupled from creative destruction, which replaces the old with the new in the economic realm and also..
|
|
|
Daron Acemoğlu |
|
24ffa3a
|
Both feared that the mechanization of stocking production would be politically destabilizing. It would throw people out of work, create unemployment and political instability, and threaten royal power. The stocking frame was an innovation that promised huge productivity increases, but it also promised creative destruction. T
|
|
|
Daron Acemoğlu |
|
6c821a1
|
Most economists and policymakers have focused on "getting it right," while what is really needed is an explanation for why poor nations "get it wrong."
|
|
|
Daron Acemoğlu |
|
d7df33c
|
Because elites dominating extractive institutions fear creative destruction, they will resist it, and any growth that germinates under extractive institutions will be ultimately short lived.
|
|
|
Daron Acemoğlu |
|
9e07530
|
The process of political centralization can actually lead to a form of absolutism, as the king and his associates can crush other powerful groups in society. This is indeed one of the reasons why there will be opposition against state centralization,
|
|
|
Daron Acemoğlu |
|
a6ff4b9
|
These monopolies, and many more, gave individuals or groups the sole right to control the production of many goods. They impeded the type of allocation of talent, which is so crucial to economic prosperity. Both
|
|
|
Daron Acemoğlu |
|
f6b89d4
|
Yes, countries such as Syria and Egypt are poor, and their populations are primarily Muslim. But these countries also systemically differ in other ways that are far more important for prosperity. For one, they were all provinces of the Ottoman Empire, which heavily, and adversely, shaped the way they developed. After Ottoman rule collapsed, the Middle East was absorbed into the English and French colonial empires, which, again, stunted thei..
|
|
|
Daron Acemoğlu |
|
33989fc
|
Nations fail when they have extractive economic institutions, supported by extractive political institutions that impede and even block economic growth.
|
|
|
Daron Acemoğlu |
|
d320fc1
|
In the case of China, the growth process based on catch-up, import of foreign technology, and export of low-end manufacturing products is likely to continue for a while.
|
|
|
Daron Acemoğlu |
|
b34afdc
|
Many studies estimate that only about 10 or at most 20 percent of aid ever reaches its target.
|
|
|
Daron Acemoğlu |
|
a454832
|
But given the changes that had already taken place in economic and political institutions, long-run repression was not a solution in England. The Peterloo Massacre would remain an isolated incident. Following the riot, the political institutions in England gave way to the pressure, and the destabilizing threat of much wider social unrest,
|
|
|
Daron Acemoğlu |
|
c9b1d90
|
There should be no presumption that any critical juncture will lead to a successful political revolution or to change for the better. History is full of examples of revolutions and radical movements replacing one tyranny with another, in a pattern that the German sociologist Robert Michels dubbed the iron law of oligarchy, a particularly pernicious form of the vicious circle.
|
|
|
Daron Acemoğlu |
|
93b1031
|
poor countries are poor because those who have power make choices that create poverty. They get it wrong not by mistake or ignorance but on purpose. To understand this, you have to go beyond economics and expert advice on the best thing to do and, instead, study how decisions actually get made, who gets to make them, and why those people decide to do what they do. This is the study of politics and political processes. Traditionally economic..
|
|
|
Daron Acemoğlu |
|
b81a37f
|
Political and economic institutions, which are ultimately the choice of society, can be inclusive and encourage economic growth. Or they can be extractive and become impediments to economic growth. Nations fail when they have extractive economic institutions, supported by extractive political institutions that impede and even block economic growth.
|
|
|
Daron Acemoğlu |
|
0313c8b
|
Different patterns of institutions today are deeply rooted in the past because once society gets organized in a particular way, this tends to persist.
|
|
|
Daron Acemoğlu |
|
aa8d1ac
|
while economic institutions are critical for determining whether a country is poor or prosperous, it is politics and political institutions that determine what economic institutions a country has.
|
|
|
Daron Acemoğlu |
|
df03470
|
authoritarian regimes currently experiencing some growth are likely to reach the limits of extractive growth before they transform their political institutions in a more inclusive direction--and in fact, probably before there is any desire among the elite for such changes or any strong opposition forcing them to do so.
|
|
|
Daron Acemoğlu |
|
2d5299e
|
Putting an end to foreign aid is impractical and would likely lead to additional human suffering. It is impractical because citizens of many Western nations feel guilt and unease about the economic and humanitarian disasters around the world, and foreign aid makes them believe that something is being done to combat the problems. Even if this something is not very effective, their desire for doing it will continue, and so will foreign aid.
|
|
|
Daron Acemoğlu |
|
8e7da90
|
But if out of every dollar given to aid, ten cents makes it to the poorest people in the world, that is ten cents more than they had before to alleviate the most abject poverty, and it might still be better than nothing.
|
|
|
Daron Acemoğlu |
|
434c8fa
|
In the same way, current Chinese growth has nothing to do with Chinese values or changes in Chinese culture; it results from a process of economic transformation unleashed by the reforms implemented by Deng Xiaoping and his allies, who, after Mao Zedong's death, gradually abandoned socialist economic policies and institutions, first in agriculture and then in industry.
|
|
|
Daron Acemoğlu |
|
9d6637b
|
science of economics should focus on the best use of scarce means to satisfy social ends.
|
|
|
Daron Acemoğlu |
|
b0a38a4
|
After all, if ignorance were the problem, well-meaning leaders would quickly learn what types of policies increased their citizens' incomes and welfare, and would gravitate toward those policies.
|
|
|
Daron Acemoğlu |
|
bf75b45
|
As we have seen, democracy is no guarantee that there will be pluralism. The contrast of the development of pluralistic institutions in Brazil to the Venezuelan experience is telling in this context. Venezuela also transitioned to democracy after 1958, but this happened without empowerment at the grassroots level and did not create a pluralistic distribution of political power. Instead, corrupt politics, patronage networks, and conflict per..
|
|
|
Daron Acemoğlu |
|
254bb4b
|
The pattern of vicious circle depicted by the transition between Haile Selassie and Mengistu, or between the British colonial governors of Sierra Leone and Siaka Stevens, is so extreme and at some level so strange that it deserves a special name. As we already mentioned in chapter 4, the German sociologist Robert Michels called it the iron law of oligarchy. The internal logic of oligarchies, and in fact of all hierarchical organizations, is..
|
|
|
Daron Acemoğlu |
|
89de0d0
|
Improved health and life expectancy were not the cause of England's economic success but one of the fruits of its previous political and economic changes.
|
|
|
Daron Acemoğlu |
|
aa742dc
|
The great inequality of the modern world that emerged in the nineteenth century was caused by the uneven dissemination of industrial technologies and manufacturing production. It was not caused by divergence in agricultural performance.
|
|
|
Daron Acemoğlu |
|
e449e7e
|
In 1800 probably only 2 to 3 percent of the citizens of the Ottoman Empire were literate, compared with 60 percent of adult males and 40 percent of adult females in England. In the Netherlands and Germany, literacy rates were even higher. The Ottoman lands lagged far behind the European countries with the lowest educational attainment in this period, such as Portugal, where probably only around 20 percent of adults could read and write. Giv..
|
|
|
Daron Acemoğlu |
|
07ec2e8
|
Books spread ideas and make the population much harder to control. Some of these ideas may be valuable new ways to increase economic growth, but others may be subversive and challenge the existing political and social status quo. Books also undermine the power of those who control oral knowledge, since they make that knowledge readily available to anyone who can master literacy. This threatened to undermine the existing status quo, where kn..
|
|
|
Daron Acemoğlu |
|
706663e
|
Many, such as the Ottoman Empire, China, and other absolutist regimes, lagged behind as they blocked or at the very least did nothing to encourage the spread of industry. Political and economic institutions shaped the response to technological innovation, creating once again the familiar pattern of interaction between existing institutions and critical junctures leading to divergence in institutions and economic outcomes. The
|
|
|
Daron Acemoğlu |
|
1522930
|
Congo, vividly illustrates how political institutions determine economic institutions and, through these, the economic incentives and the scope for economic growth.
|
|
|
Daron Acemoğlu |
|
4a14f5b
|
Absolutism and a lack of, or weak, political centralization are two different barriers to the spread of industry. But they are also connected; both are kept in place by fear of creative destruction and because the process of political centralization often creates a tendency toward absolutism.
|
|
|
Daron Acemoğlu |
|
5a7e956
|
In this chapter, we will see how during the critical juncture created by the Industrial Revolution, many nations missed the boat and failed to take advantage of the spread of industry. Either they had absolutist political and extractive economic institutions, as in the Ottoman Empire, or they lacked political centralization, as in Somalia. A
|
|
|
Daron Acemoğlu |
|
0bc46a4
|
Inequality in the modern world largely results from the uneven dissemination and adoption of technologies,
|
|
|
Daron Acemoğlu |
|
5661faf
|
The fear of creative destruction is the main reason why there was no sustained increase in living standards between the Neolithic and Industrial revolutions.
|
|
|
Daron Acemoğlu |
|
652c280
|
Most important perhaps, in most of these cases there were enormous benefits from holding power. These benefits both attracted the most unscrupulous men, such as Stevens, who wished to monopolize this power, and brought the worst out of them once they were in power. There was nothing to break the vicious circle. N
|
|
|
Daron Acemoğlu |
|
e6661b1
|
when a critical juncture arrives, these small differences that have emerged as a result of institutional drift may be the small differences that matter in leading otherwise quite similar societies to diverge radically.
|
|
|
Daron Acemoğlu |
|
dece8ea
|
The patent system, which protects property rights in ideas, was systematized in the Statute of Monopolies legislated by the English Parliament in 1623, partially as an attempt to stop the king from arbitrarily granting "letters patent" to whomever he wanted--effectively granting exclusive rights to undertake certain activities or businesses. The striking thing about the evidence on patenting in the United States is that people who were gran..
|
|
|
Daron Acemoğlu |
|
36b6cc8
|
England did not become a democracy after the Glorious Revolution of 1688. Far from it. Only a small fraction of the population had formal representation, but crucially, she was pluralistic. Once pluralism was enshrined, there was a tendency for the institutions to become more inclusive over time, even if this was a rocky and uncertain process. In
|
|
|
Daron Acemoğlu |
|
7693752
|
Under inclusive economic institutions, wealth is not concentrated in the hands of a small group that could then use its economic might to increase its political power disproportionately. Furthermore, under inclusive economic institutions there are more limited gains from holding political power, thus weaker incentives for every group and every ambitious, upstart individual to try to take control of the state.
|
|
|
Daron Acemoğlu |
|
d93dc53
|
IF THE POLITICAL and economic institutions of Latin America over the past five hundred years were shaped by Spanish colonialism, those of the Middle East were shaped by Ottoman colonialism.
|
|
|
Daron Acemoğlu |
|
adb19a9
|
This King, one Bogota, was so terrified that, in his anxiety to free himself from the clutches of his tormentors, he consented to the demand that he fill an entire house with gold and hand it over; to this end he sent his people off in search of gold, and bit by bit they brought it along with many precious stones. But still the house was not filled and the Spaniards eventually declared that they would put him to death for breaking his promi..
|
|
|
Daron Acemoğlu |
|
559cd39
|
The geography hypothesis claims that the great divide between rich and poor countries is created by geographical differences. Many poor countries, such as those of Africa, Central America, and South Asia are between the tropic of Cancer and Capricorn. Rich nations in cntrast tend to be in temperate latitudes. This geographic concentration of poverty and prosperity gives superficial appeal to the geography hypothesis.
|
|
|
Daron Acemoğlu |
|
6486298
|
But selling patents was a good idea only for someone like Edison, who had ideas faster than he could put them to practice. (He had a world-record 1,093 patents issued to him in the United States and 1,500 worldwide.)
|
|
|
Daron Acemoğlu |