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32496ce The most important lesson is that extractive institutions cannot generate sustained technological change for two reasons: the lack of economic incentives and resistance by the elites. In addition, once all the very inefficiently used resources had been reallocated to industry, there were few economic gains to be had by fiat. Then the Soviet system hit a roadblock, with lack of innovation and poor economic incentives preventing any further p.. Daron Acemoğlu
e6db904 A whole set of laws created criminal offenses for workers who were perceived to be shirking. In June 1940, for example, a law made absenteeism, defined as any twenty minutes unauthorized absence or even idling on the job, a criminal offense that could be punished by six months' hard labor and a 25 percent cut in pay. All sorts of similar punishments were introduced, and were implemented with astonishing frequency. Between 1940 and 1955, 36 .. Daron Acemoğlu
7bb1307 About 15,000 BC, the Ice Age came to an end as the Earth's climate warmed up. Evidence from the Greenland ice cores suggests that average temperatures rose by as much as fifteen degrees Celsius in a short span of time. This warming seems to have coincided with rapid increases in human populations as the global warming led to expanding animal populations and much greater availability of wild plants and foods. This process was put into rapid .. Daron Acemoğlu
a575234 Even when bonuses and incentives were effective in changing behavior, they often created other problems. Central planning was just not good at replacing what the great eighteenth-century economist Adam Smith called the "invisible hand" of the market. When the plan was formulated in tons of steel sheet, the sheet was made too heavy. When it was formulated in terms of area of steel sheet, the sheet was made too thin. When the plan for chandel.. Daron Acemoğlu
111c850 Third and most radically, it is not even historically or geographically or culturally predetermined that Europeans should have been the ones colonizing the world. It could have been the Chinese or even the Incas. Of course, such an outcome is impossible when we look at the world from the vantage point of the fifteenth century, by which time Western Europe had pulled ahead of the Americas, and China had already turned inward. But Western Eur.. europe Daron Acemoğlu
f4e5549 Third and most radically, it is not even historically or geographically or culturally predetermined that Europeans should have been the ones colonizing the world. It could have been the Chinese or even the Incas. Of course, such an outcome is impossible when we look at the world from the vantage point of the fifteenth century, by which time Western Europe had pulled ahead of the Americas, and China had already turned inward. But Western Eur.. europe Daron Acemoğlu
d7963ea IN 1445 IN THE GERMAN city of Mainz, Johannes Gutenberg unveiled an innovation with profound consequences for subsequent economic history: a printing press based on movable type. Daron Acemoğlu
f381ad7 Somalia, situated in the Horn of Africa, illustrates the devastating effects of lack of political centralization. Somalia has been dominated historically by people organized into six clan families. The four largest of these, the Dir, Darod, Isaq, and Hawiye, all trace their ancestry back to a mythical ancestor, Samaale. These clan families originated in the north of Somalia and gradually spread south and east, and are even today primarily p.. Daron Acemoğlu
06c9d6d THE MOLUCCAN ARCHIPELAGO in modern Indonesia is made up of three groups of islands. In the early seventeenth century, the northern Moluccas housed the independent kingdoms of Tidore, Ternate, and Bacan. The middle Moluccas were home to the island kingdom of Ambon. In the south were the Banda Islands, a small archipelago that was not yet politically unified. Though they seem remote to us today, the Moluccas were then central to world trade a.. Daron Acemoğlu
b3eff72 Dutch governor of Batavia, Jan Pieterszoon Coen, came up with an alternative plan. Coen founded Batavia, on the island of Java, as the Dutch East India Company's new capital in 1618. In 1621 he sailed to Banda with a fleet and proceeded to massacre almost the entire population of the islands, probably about fifteen thousand people. All their leaders were executed along with the rest, and only a few were left alive, enough to preserve the kn.. Daron Acemoğlu
3561119 It was the development of the sugar plantation colonies of the Caribbean beginning in the early seventeenth century that led to a dramatic escalation of the international slave trade and to an unprecedented increase in the importance of slavery within Africa itself. In the sixteenth century, probably about 300,000 slaves were traded in the Atlantic. They came mostly from Central Africa, with heavy involvement of Kongo and the Portuguese bas.. Daron Acemoğlu
3e8ffaa Just as African societies took aggressive advantage of the economic opportunities presented by the slave trade, they did the same with legitimate commerce. But they did so in a peculiar context, one in which slavery was a way of life but the external demand for slaves had suddenly dried up. What were all these slaves to do now that they could not be sold to Europeans? The answer was simple: they could be profitably put to work, under coerci.. Daron Acemoğlu
1fe3a86 Kingdom of Kongo when European traders arrived. The long-distance trade that transformed Europe also transformed the Kingdom of Kongo, but again, initial institutional differences mattered. Kongolese absolutism transmogrified from completely dominating society, with extractive economic institutions that merely captured all the agricultural output of its citizens, to enslaving people en masse and selling them to the Portuguese in exchange fo.. Daron Acemoğlu
4554e18 Economic growth and technological change are accompanied by what the great economist Joseph Schumpeter called creative destruction. They replace the old with the new. New sectors attract resources away from old ones. New firms take business away from established ones. New technologies make existing skills and machines obsolete. The process of economic growth and the inclusive institutions upon which it is based create losers as well as winn.. Daron Acemoğlu
f21b972 Stalin himself said in 1937 that "only bureaucrats can think that planning work ends with the creation of the plan. The creation of the plan is just the beginning. The real direction of the plan develops only after the putting together of the plan." Daron Acemoğlu
a4cfb45 Inventors in the United States were once again fortunate. During the nineteenth century there was a rapid expansion of financial intermediation and banking that was a crucial facilitator of the rapid growth and industrialization that the economy experienced. While in 1818 there were 338 banks in operation in the United States, with total assets of $160 million, by 1914 there were 27,864 banks, with total assets of $27.3 billion. Potential i.. Daron Acemoğlu
84b02d3 Their next option was Australia. Its eastern seaboard had been explored by the great seafarer Captain James Cook. On April 29, 1770, Cook landed in a wonderful inlet, which he called Botany Bay in honor of the rich species found there by the naturalists traveling with him. This seemed like an ideal location to British government officials. The climate was temperate, and the place was as far out of sight and mind as could be imagined. A flee.. Daron Acemoğlu
765fb41 Chinese economic growth today also has several commonalities with both the Soviet and South Korean experiences Daron Acemoğlu
a90b031 One of the most notorious of these was Cornelius Vanderbilt, who famously remarked, "What do I care about the Law? Hain't I got the power?" Daron Acemoğlu
7198aad albeit of a particularly vicious and inefficient type. Countries become failed states not because of their geography or their culture, but because of the legacy of extractive institutions, Daron Acemoğlu
98fa7bb For every elite benefiting from extraction there is a non-elite who would love to replace him. Daron Acemoğlu
643e068 Bill Gates, like other legendary figures in the information technology industry (such as Paul Allen, Steve Ballmer, Steve Jobs, Larry Page, Sergey Brin, and Jeff Bezos), had immense talent and ambition. But he ultimately responded to incentives. The schooling system in the United States enabled Gates and others like him to acquire a unique set of skills to complement their talents. The economic institutions in the United States enabled thes.. Daron Acemoğlu
e752f3c Bill Gates, like other legendary figures in the information technology industry (such as Paul Allen, Steve Ballmer, Steve Jobs, Larry Page, Sergey Brin, and Jeff Bezos), had immense talent and ambition. But he ultimately responded to incentives. The schooling system in the United States enabled Gates and others like him to acquire a unique set of skills to complement their talents. The economic institutions in the United States enabled thes.. Daron Acemoğlu
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