Political rulers don't say to themselves, "I'll keep my country poor so that I can be wealthy".
Rather, they say, "My nephew broke a contract with another company, and they're suing? I'll just tell the judge to dismiss the case." "Mary is the best person to be in charge of roading but she is not related to me. I'll appoint my good-for-nothing son." "Newspapers are saying bad things about my rule. I'll shut them down." "A sewer system or a safe water supply is not a fitting monument for me. I'll start an airline instead. The banks will lend for it; I'll see to that all right."
It's not high-level, abstract deliberateness. It's a thousand little decisions that undermine and destroy institutions like the rule of law, transparent government, meritocratic bureaucracy, and evidence-based investment.
There are plenty of whites in Eastern and Southern Europe that are still doing this, and every country can find examples if they look back in their history. Heck, I think many are currently accusing either Biden or Trump from engaging in these specific problems, look at the situations with their children and for a start. Meanwhile, Obama was accused of many things, but cronyism wasn't one I remember, and at least not to the extent of the last administrations.
I have no evidence, but my gut feeling is that countries in which there are long-standing traditions of "speaking truth to power", being able to criticise policy decisions without fear of losing your life (and without the ruler fearing for his life or his rule because of the criticism), and of mass public protest, get things that improve the lives of ordinary people.
Hofstede's cultural dimensions theory attracts me, especially the notion of "power distance": the degree to which people want to have a say in decisions that affect them. Low power distance means being close to decisions; high power distance means doing what those in charge decide for you. The Anglo countries, the Nordics, and northwestern Europe generally, score relatively low for power distance; the Philippines and other similar countries score high. Eastern and southern Europe are middling high.
Power distance is pervasive: it affects interactions with minor authority figures like parents, doctors and your supervisor as well as those in government. Low power distance leads to demands for explanations, which those in charge feel compelled to provide...eventually. Thus transparent government at all levels, and eventually rules-based government at all levels, from the family up, and rules-based peaceful resolution of internal conflicts, which is what I think most people mean when they say "democracy" - orderly, peaceful regime change that is accepted gracefully by the losers, and without reprisal against them by the winners.
Beware single-factor explanations, though. And especially beware things which you want to believe.
"A sewer system or a safe water supply is not a fitting monument for me. I'll start an airline instead."
The first two need constant, unsexy maintenance or they kill people. The second can stagger along on government subsidies for decades (see Air Canada).
It's hard to avoid politicians spending on highly visible stuff at the expense of utterly necessary but invisible (when it's done) maintenance in the First World. In the Third World? Good luck.
Unmaintained planes kill lots of people too. Aeroflot used to be notorious for this. I don't think that maintenance ever crosses the minds of this kind of ruler.
I think you're mixing two definitions of "elites". Taxi-driving immigrants might have been in the top income and/or wealth decile, but they were never elite in the sense it's being used in the review - i.e. political decision makers like dictators, magnates, cabinet members, generals, etc.
I forget the name now, but a former Pakistani general did emigrate to the US and his daughter became a PBS journalist. I looked this up a few months ago when I recognised the surname of this woman (I studied South Asia a lot). So even the very top elites do in fact emigrate because they make the calculation that their offspring will probably be better off in the long run (and that's probably rational in many cases).
There's three breakpoints that make it much more likely an elite leaves their power base.
-Strong/growing potential of being killed or ruined by those in charge
-Strong/growing potential of being overthrown by a different group
-Maximizing the potential extraction from the poor country you are in (that is, you have lots of money but poor institutions in your country mean you live at a low qualify of life unless you move)
In each case, while it made sense to stay as a powerful elite for a while, there was a point where it made more sense to leave.
Oh, lord. If your theories of economic growth don't even try to explain Imperial Germany, Imperial Japan, Cold War South Korea, or Cold War Taiwan, what the hell good are they?
IDK about early Korea or Taiwan, but Germany and Japan didn't work out so well. I think nations probably fail for lots of reasons, not just one or the other. Listening to Lex Fridman talk with Magatte Wade, I'm totally down with bad institutions being one of many pitfalls.
Both countries grew quite well economically after the war, and the conclusion one can draw is that the destruction of physical capital didn't matter that much because each still contained so many people who'd been economically productive beforehand.
Hmm the OP used imperial Germany and Japan, which I take to mean before WWII. Germany after the war is a pretty good example of why institutions matter.
Imperial Japan would be during WW2 as well. And it would be quite odd to consider Imperial Japan to be a "failure". Pseudoerasmus discusses how they got ahead of other places industrially here https://pseudoerasmus.com/2017/10/02/ijd/ Japan's military victories over Europeans were major inspirations for anticolonial movements, and I think their successes on that front are evidence against them being a "failed state" in the way that so many post-colonial countries wound up being. The very high frequency with which post-colonial regimes wound up being "extractive" failed states in Acemoglu's terms should raise questions about what the actual cause of that is. This paper citing Acemoglu https://academic.oup.com/isq/article/63/2/406/5377578?login=false has that finding, but because they explicitly aren't making any comparison of non-colonized countries (like Ethiopia & Thailand), they also fail to question whether colonialism was the actual cause of these countries' outcomes.
Post-war US economic aid confounds our ability to easily assess it, but both Germany and Japan grew significantly after the war as well. I don't know the trajectories they were on before or after, but by the 1950s at least, both were doing well and rapidly improving, despite having most of the industrial base destroyed in the war.
Sure, the Nazis/Emperor were no longer in charge, but for AR's theories that really shouldn't matter either.
The argument isn't that it can't happen, but that it can't be sustained long-term outside a democracy, because the authoritarians in power are always ready to ditch growth in order to maintain control.
China is actually a perfect example - it had a good run, but now the autocrats have cracked down, and China will peak fairly soon, never having overcome the U.S..
The kind of rapid growth China experienced is generally only possible during periods of "catch up" development, where a lagging country sprints towards the global technological frontier. Once at the frontier (which China more or less is now), growth slows to the (low) level of other countries at the frontier.
The slowing was inevitable and entirely unavoidable regardless of policy.
Parts of Shanghai look better than NYC or any other major global city, then just outside of Beijing's last ring road it looks like Afghanistan, so I get confused trying to assess its current state of development.
Similarly a lot of the growth has come from urbanization, which might be cresting, but if you just count the working age population who haven't migrated to the coasts yet you're looking at numbers larger than most other countries' entire populations. Actually the number of Chinese citizens who will migrate to urban areas this year will undoubtedly be larger than the median country's entire population.
I don't much know what to make of this all, just that China is weird and hard to predict. I lean with you that this probably peaks soon, but if I'm wrong it's going to be because I couldn't wrap my head around the scale of the place.
My main point might have gotten lost above, that data about PRC population trends can be misleading. These underscore that point.
Meng and Long note that cities in China are shrinking "in the context of rapid urbanization."
That might be confusing at first glance, what does it mean for cities to shrink during urbanization (prior to 2020)? If you look at the broader work of their Shrinking Cities Research Collective, it's clear they really see economic migration as the major driver here, they would agree with me that people are flooding into Beijing. When they talk about declining populations in the northeast they're not talking about Beijing, but about cities in Heilongjiang, like for example the Yichun case study:
My main point was that there are unique complexities to data in China that make it hard to concretely follow trends. One specific such oddity is the hukou system, which undermines official locality population statistics. Many of the people who live and work on the coasts aren't technically residents there, which just messes with all the numbers.
Meng and Long's research has pointed out another way stats in the PRC are confusing, which is that politicians frequently shift the boundaries of administrative districts, sometimes to intentionally alter local population statistics to make themselves look progrowth, sometimes to limit their responsibility for struggling areas, it's a very noisy effect.
Of course, we could easily have increasing urbanization simultaneously with declining urban populations, contradictory as those might seem at first glance. In fact, we are very likely to see that in the coming years as national population decline accelerates and as urban migration continues. I suspect we're still 2-5 years out from that, but, only like 60/40 on that, I could easily be wrong. Maybe zero covid was shock therapy for the economic migration patterns and this has flipped already. There were some dramatic images of economic migrants returning to rural areas on foot last year to avoid quarantines. Frustratingly I cannot find up to the month numbers on Beijing's population that include migrant data that I trust to even gesture at the true picture.
All that said, I appreciate the references, but they bolster rather than detract from my main point above, which was that stats and realities in the PRC are confusing, so drawing strong conclusions from statistics and trendlines there is risky. I lean that China is cresting too, like GP, I'm just urging caution here.
I mean, sure, it's a hypothesis. The problem is, there's no obvious evidence to distinguish the hypotheses "pluralistic institutions are essential to sustained growth" and "The United States was simply in a position to impose its favored political arrangements on Japan and (West) Germany after WWII, and to demand the adoption of the same from South Korea and Taiwan at the end of the Cold War as an implicit condition of continuing to defend them from dangerous neighbors".
The current trouble in China might be evidence for it, sure, but then you'd either have to count Japan's growth collapse since the early 1990s as counter-evidence, or treat Japan as having "extractive" institutions even after WWII. One obvious counter-argument would simply be that the sort of export-oriented industrialization that was behind the Japanese and Chinese "miracles" has inherent limits (for example, in how much the rest of the world can import, based on the size of the world economy). and China hit those limits earlier because it's an order of magnitude larger in population.
I don’t think the idea is that institutions are a panacea - if you’re undergoing demographic collapse (or in another case, get your country raped by Russia) that’s going to hurt the economy no matter what.
While if you average Japan from 1945 to now, that’s still going to look pretty great.
The trouble there is, if someone's going to throw out the Japanese Lost Decade(s) as data point against the importance of pluralistic institutions on "demographic collapse" grounds, they have to explain why they won't let the other side throw out the recent Chinese slowdown as evidence for the importance of those same institutions on the same demographic basis.
Fundamentally, the problem of this book's thesis of "development requires democracy" (as also exists with the once-fashionable argument that "development causes democracy") is that each of the three great struggles of the 20th Century (the First World War, the Second World War, and the Cold War) ended in a US victory. Thus any evidence for a link between development and democracy might simply be "as a country developed, it either conformed to the expectations of the United States, or was crushed as a threat to the United States."
Well, the US is probably the number one data point in their theory, and they likely see the US's victory (largely due to overwhelming economic advantage) as the ultimate result of the democratization of the US's politics.
Of course, if they're wrong then the US just confounds everything and there's a lot less to see.
Acemoglu's issue is that if he follows his thesis to its conclusion it leads to right wing politics in a way the left wing Acemoglu doesn't want. (This is not speculating on his political allegiances: he's called himself a social democrat.) If you really believe that extractive elites are the issue and then define extraction and elites in a principled way you cannot escape that a lot of his favored policies fall under his definition of extraction. You can see this in Brazil, for example, where his left wing politics blinded him to the ways the Brazilian state was extracting and then not using such extracted resources wisely.
Of course, I find this rather easy to resolve: I do think extraction is bad but it's possible the good done with the money overwhelms the bad. In short we should be suspicious of extraction but sometimes the good it supports really is sufficient to justify it. But in that case he would have to admit that his central thesis (elite extraction bad!) is wrong. He would have to rework everything to be about how extraction occurs (and how much damage it causes) vs what determines what the resources created by extraction are spent on (and how effective that is). Which would be a more interesting and better book in my opinion but wouldn't be Acemoglu.
Yes, the immediate question which popped into my mind was, "what if there were an institution that tried to be inclusive of some people by being extractive from other people?"
That question summarizes the entire project of first world left wing politics. Extract from powerful and dominant groups (at least in their opinion) and use that to create a more inclusive society by transferring the extracted resources to weaker or less dominant groups (at least in their opinion). That this fact escaped Acemoglu is still baffling to me. I think he's quietly drawing the definition of extraction so that it just doesn't include things he likes. But that's a rather damning criticism, isn't it?
Yes. This is reminding me of the book review about medieval Catholic marriage rules. It's fine to embrace the controversial topic or reject it, arguing for it or against it. Even putting up a pro forma cookie-cutter BS argument against it is useful as a signal. But completely ignoring the controversial topic feels like scientific malpractice.
Seems off-topic, but I've been trying to understand what you are referring to, and I'm stumped. Are you talking about Henrich's book ("marriage rules")? What controversial topic did it ignore?
It talked about a millennium-long program to exert control over human mating, and didn't address the question of whether 30ish generations of this had a genetic-level effect on the group of humans it was done to. Generally speaking, even considering the hypothesis can get you called a racist, and I'm only discussing it here because I'm pseudonymous.
Off the top of my head, there seem to be some good reasons that the policy wouldn't have a strong effect. The policy might have been poorly enforced (although that undermines the main thesis). There wasn't any positive direction, just removal of some options, so there's no a priori reason to assume that any sort of evolution would occur. (Or is there? What criterion filled the gap left by kinship?) It's entirely possible that humans have a baked-in instinct to treat kin well, but when that isn't given a strong clan to focus on, it fades away. (Alternatively, the instinct might re-focus onto constructed groups such as religions, states, ideologies, corporations, or internet subcultures, leading in the first three cases to bloodier wars.)
There's a lot of fascinating questions that could be asked and investigated, but mostly no one does, because they'd be accused of being Nazis.
Ah OK, thanks. Well, it seems that you and I are in agreement on this.
But Henrich does address the genetic issue. He has a whole chapter on it. His conclusion is that the changes induced by the Church's policies were entirely cultural, not genetic. How they changed the culture is the entire point of the book. The argument for why it isn't genetic is that the changes promoted urbanization and that cities are "genetic death traps", what he calls "the urban graveyard effect". (There is another rarely discussed argument in the book about the Cistercians, and there again Henrich mentions a "genetic death trap".)
In other words, at least according to him natural selection wouldn't favor WEIRD psychology. It had to be a cultural transmission, not genetic.
He may be right or wrong, but he does not ignore the issue.
It was this review, of a book whose main thesis was that the West's rise to pre-eminence arose from the Catholic Church's marriage rules, which weakened kin networks:
Yes, Acemoglu & Robinson think the problem with post-apartheid South Africa is that the state doesn't redistribute enough ("inequality" is their big complaint) rather than that the state can hardly keep basic utilities running. They also thought on Hugo Chavez' death that he hadn't created a political machine to dominate Venezuela and that this gave hope for a democratic Venezuelan future despite his dictatorship. https://web.archive.org/web/20140809144200/http://whynationsfail.com/blog/2013/3/14/paradoxes-of-chavismo.html
I'm a bit confused by their take that you need a strong central government. Not that I can't see arguments for it, but (at least as presented here) the arguments aren't fleshed out enough to take them seriously.
It seems, based on the rest of their arguments, that a weak central government with strong inclusive institutions would be much better than a strong central government interested in extraction. Which at that point you might as well just drop the strong central government angle and concentrate on the inclusive institutions.
So their argument is that strong government is necessary but not sufficient for a good society? That inclusive institutions will be overrun if not supported by a central government capable of defending them?
If so I'm still uncertain, but can definitely follow the logic and don't have an immediate criticism.
I think they address this exact issue in "The Narrow Corridor". Basically, they argue that balance is needed between "society" and "the state" (not scare quotes, those are their terms) to prevent either from running amok.
I disagreed with some aspects of the book, but I won't get into that here.
I agree that that's the common term for it, and that it's not what AR are referring to. But the question is, **should** they be referring to it? If they take their theory seriously, and fearlessly pursue its implications, why isn't this one of the things the book focuses on?
Maybe I'm misunderstanding, but I don't think a reasonable person would argue that redistribution is the key to economic growth, just in the sense that you need to have assets to redistribute from one group to another, before that becomes relevant. Ie, You have to figure out the the puzzle of how to build and acquire assets in the first place, which is what the authors are addressing. Figuring out what to do with them comes later.
I think the point is that if one “extracts” from the haves to “redistribute” to the have nots one might also kill the golden goose of good institutions and economic growth.
At what point a society is well off enough and institutions are sufficiently robust that “redistribution” doesn’t have the downsides of “extraction” is an interesting question.
To expand on this, when AR use the term extractive institutions, I think what they're referring to (I haven't read the book but I recall listening to a podcast with Acemoglu once upon a time) is something akin to the "natural state" that Douglass North and his coauthors described in Violence and Social Orders. Here's a good summary:
"In order to have a stable order, a society must deal with the potential for organized violence. In a limited-access order, which the authors often refer to as a “natural state,” groups with the potential for organized violence join in a (possibly fragile) coalition to rule the country. This coalition excludes others from key economic activities, reserving rents for its members. Satisfied by these rents, coalition members refrain from violence. To the extent that limited-access orders are corrupt by American standards, such corruption serves an important role in providing its members with an incentive to remain in the coalition.
Reviewing their description of "inclusive", it occurs to me that a rather horrifying example might be the antebellum South, where in the same geographical region resources were extracted from one part of the population and distributed to another. The distribution itself wasn't done with an eye toward growth and development, and focused most of the extracted wealth back on agriculture and aspiring aristocrats, so it's not a very successful example of their concept. But if I try to imagine the Confederacy crossed with some bizarro version of socialism, where slaves were public property and their labor used to fund a UBI for non-slaves... Ugh. It starts to sound like something Ursula K. Le Guin might have written in one of her grimmer phases.
"According to Aristotle, Phaleas ... recommended setting up dowries for the rich to give to the poor in order to level property ownership over time. In addition to equality of land and education, Phaleas proposed that all artisans be publicly owned slaves."
They actually discuss this topic to my memory and explain Soviet and Antebellum South successes with idea re-allocation of resources to more profitable sector gave more than losses on extraction
I don't recall that in the book. But even if they mention it it's a small part that isn't well integrated into the thesis of a 500 page book. And you also have cases that don't involve slavery and executions to keep the suppressed people in line. Of course, any thorough treatment would have to in turn distinguish the times it worked from the times it didn't with a pretty thorough interrogation of what 'worked' means.
For example, a lot of the Soviet Union was kind of cosplaying modernity rather than pursuing actually economically viable industries. I think this actually works fine when it comes to domestic living standards. If you build a bunch of apartment blocks to cosplay that you have urban culture people will move into them and you will actually have an urban culture, if not exactly the one you wanted. But if you cosplay high productivity then you might have steel factories producing real steel but you might not have really raised productivity.
And then there are just bad bets. Like South Carolina betting on agricultural export markets just before a massive crash.
Nah, Acemoglu's thesis (as presented in the review above, I'm not familiar with it first-hand, nor have I been encouraged to by the review in question) seems just outright right-wing to me. I mean, how else would you classify the claim that the institution of private property is the non-extractive end of the scale of more to less expropriation?
Surely, "extraction by elites can be fine, actually" is a much more internally consistent position, but his project is still about defending the very institution that contemporarily facilitates this extraction. I don't think you should make much of the fact he's (superficially and instrumentally) accepting left-coded assumptions to do that.
The examples of E/W Germany and N/S Korea are so seductive! It must, must be the institutions!
But doesn’t work elsewhere, mostly. Poverty, corruption, and violence are the norm; it is the peace and prosperity and the rule of law that are really exceptional and fragile, and we just don’t really know why they happen.
Those examples don't seem to contradict culture/genetics acting partly through institutions if you consider which states actually imposed those institutions(the west/the Soviet Union).
If all European and East Asian countries without a history of communism have those things to a high enough degree to become developed countries then it seems like two factors explain a lot of the variation in those four big things.
Good question. Capital markets allocate capital. You can have weird state-owned enterprises that still rely on capital markets for bond financing, for example.
But it yes, our dialog points to the underlying complexity of these institutions: there’s no absolute property rights, and there are no perfect capital markets, everything has a degree and a measure. This is why simple explanations using prime colors rarely suffice.
CAF isn't common enough to have a wide-ranging effect, at least for most law-abiding citizens. Career criminals who get caught up in it probably have very low feelings of property rights already, even without CAF.
Individual cases of outright government theft are serious but rare. It seems that our institutions are pushing back against it and preventing it from becoming widespread. Or in AR's terminology, while a small group of elites are attempting to set up an extraction system, the larger inclusive institutions are preventing wide-spread adoption and may be reversing what exists now.
If it stays rare, that would indeed be fortunate. I'm having trouble finding good, recent, statistics. https://en.wikipedia.org/wiki/Civil_forfeiture_in_the_United_States says "According to government records, Justice department seizures went from $27 million in 1985 to $556 million in 1993 and $4.2 billion in 2012." Admittedly small compared to the scale of the economy as a whole.
I do agree that there has been some push back from some of our institutions, which is a help.
Ah, sure, and again points to diminishing returns of simplistic explanations. “Germany” is a young country, its constituent parts had / still have distinct cultures, etc. The “!” In my comment was there sarcastically. Same for N/S Koreas: I bet we could easily split Italy in the same way. Heck, the US for that matter.
The book review commented on this, but it's worth looking in more detail. The difference between the economy in the US and the rest of the world is huge. And the difference between high-wealth countries and low wealth countries is also huge.
Alabama is the US state with the lowest per-capita GDP, at ~$51,000. That is enough to be the same as or higher than any other North American country (just shy of Canada's second place), 5th highest in Asia, almost top 10 in Europe, highest in Africa (over 2.5x the next highest), etc. If you exclude tiny countries with unusual economies (Singapore, Luxembourg), Alabama rates even higher.
Sure, you could split the US or other countries between high income and low income sections, but really the difference between even the poorest parts of rich countries and most of the rest of the world is still very stark.
Thanks for the link! Learned some more about my country. But as I know some: I shrug. Yep, the southern part - Bavaria et al. - was still rural, some areas in the north-west, too (cow-pasture-country). So? "Fundamental differences" between East and West those were not - the T-Rex in the room is two generations of socialist state monopolism. Taking pics every 500 meter in Germany 1989, you would clearly see one country in color and one in dirty-grey. Otoh: 33 years later, one still sees differences (a magnitude smaller, as before 1944). If anything, the East had all the "non-institutional" pre-requisites to succeed as a modern industrialised country. As did the North of Korea. Politicians can do limited good, but unlimited bad.
There is a whole book about "spotting the GDR long before it came to be" and I found it extremely insightful about my own life's experiences, not just in Germany but across Northwestern and Southeastern Europe in general: "The Shortest History of Germany".
It might be criticised for its tendency to paper over too many details, but I think that is exactly its strength: Describing a long arc of history short enough that you can get the larger picture.
> Alert readers may notice a problem here. If you don't know if X causes Y or vice versa, how can you possibly tell if Z causes X and doesn't otherwise affect Y? You can't.
Well, for example, Z may precede X and Y, which excludes reverse causality. In general, Z is a much simpler variable to analyze, and the stories you have to tell in order for Z to affect Y directly get pretty wild. It may not be possible to prove completely that Z is a valid instrument in all cases, but it's probably better than "control for some observables and pray" or "don't even try" which, in many cases, is the alternative.
Maybe the most classic example of IV is the Israeli school experiment, when Israel limited class sizes to 40. A class of 41 would be split up; one of 40 would not. Whether a class has 40 or 41 students effectively random, and shouldn't have any impact on students (or confounders, like neighborhood income) other than through the effect of class size. (Note that we don't look at actual class size, since some 40-student classes will actually be broken up and some won't, which will not be random). While many of AR's instruments are much less clear-cut than this, reducing all of IV to "In reality, what you are mainly hoping for is that the causal effect of Z through X on Y is more intuitively appealing to journal editors and referees than the simple effect of X on Y." is pretty harsh...
> This is why economics is such fun and has such a high reputation among non-economists. Also, the camp-following whores thing.
I think the law was for public schools, is that possible in Israel? In the US that seems like it would require the student to move or enroll in private school.
For those not aware, like me 10 minutes ago, this is a reference to an article James Buchanan (Nobel laureate for public choice theory) wrote in the Wall Street Journal against economists that believed increased minimum wage could lead to increased employment.
> Such a claim, if seriously advanced, becomes equivalent to a denial that there is even minimal scientific content in economics, and that, in consequence, economists can do nothing but write as advocates for ideological interests. Fortunately, only a handful of economists are willing to throw over the teachings of two centuries; we have not yet become a bevy of camp–following whores.
I would like economists to advance from proving the scientifically obvious (or becoming camp-following whores) to advancing blatantly superior options
As in say 90% of economists will find a negative effect on hiring and that's nice but there will be a roughly inverse effect on voter choice towards higher minimum wages and therefore, for the love of god, prominently contrast the costs and benefits of that and an earned income tax credit or a reverse payroll tax at low salaries
I’ve actually felt that Why Nations Fail was overly maligned, as its bearish opinion about China seemed more and more wrong as the years went by. Until, fairly swiftly, it didn’t.
Koyama & Rubin’s recent book, How the World Became Rich, tried its best to be fairly balanced across theories, and seemed to mostly be in favour of the Why Nations Fail world view. So it seems to have survived a bit of time now. It doesn’t fit explain everything in world history, and we can definitely critique the vagueness of parts, but the core emphasis on democracy, rule of law, and other “inclusive institutions” seems to be on the right track.
Democracy is only associated with good countries because it only WORKS in good countries. There are countries that try and build democracy and fail, and then their crappiness as countries is blamed on a lack of democracy and vice versa for successful democracies. But in both cases, democracy was entirely secondary - the underlying properties of the countries explain why democracy did or didn't work, not the other way around.
Knock China all you want, but there are numerous countries that are vastly more democratic than China that haven't acheived a fraction of their success. Sure, (without AGI etc) China might not be as wealthy as the US in the next century, but all those more-deomcratic-than-china countries won't even get close enough for it to even be considered. And yet, China not beating the US is blamed on a lack of democracy, but China being better than much of the world says nothing negative about democratic countries poorer than china.
It's even more rigged than you describe: it's only CALLED "democracy" when it's in "good" countries. Otherwise, it's an "electoral autocracy." And whatever works in good countries gets called "democracy" even as they literally crown kings.
Crowning a figurehead king who has no influence on policy while a competitive electoral process elects a parliament that controls policy does not make a country undemocratic. The people still rule.
Presence of elections alone does not make a democracy. Even if the dictator/ruling party does not cheat (which they usually do, but astonishingly often they would have won the election even without cheating, only not so overwhelmingly) this is empty without independent judiciary and free speech and journalism, because public cannot make an informed decision, and government is not bound by procedures, and it is too easy to eliminate sufficiently popular political alternatives. And of course dictators are often (at least for a time) genuinely popular, and they gain power because they do some good things. Until things go wrong (as they always do), and by that time it is impossible to remove the dictator in peaceful way, and worse, there are usually no real alternatives when you need them, because the dictator ensured that earlier by destroying all outstanding personalities and authorities who do not submit to him/her completely.
> Democracy is only associated with good countries because it only WORKS in good countries. There are countries that try and build democracy and fail, and then their crappiness as countries is blamed on a lack of democracy and vice versa for successful democracies.
There is some truth in that, but it is also misleading. Yes, for a democratic or otherwise country to work its institutions must work, and the government must have actual power, and building institutions people will implicitly listen to and obey (more or less) is very difficult when you are starting from anarchy. Theoretically, it is not that difficult to kickstart development of a very poor country, any half sane economic policy will put them on the (initially) fast development track. However this is useless if you do not have the authority to implement those policies. And free elections and judiciary are not very useful when the actual power (also to deal violence) lies within mafia, criminals, warlords, etc. (see e.g., attempts to introduce elections in Iraq). This is why sane dictators often do a better job (initially) than poor attempts at democracy. Problem is, dictators do not remain sane for long, but even if they do not go insane, they do a very good job of destroying all the people with authority and skill which are not completely beholden to them, and the institutions which they build work better than anarchy, but are ultimately dysfunctional because of inherent corruption and distrust of initiative. Genuine functioning democracy is always better than dictatorship (there is no contest about it) but building it is non-trivial. And it is also non-trivial to pass from dictatorship to democracy when the dictator outlives his/hers welcome. And sane dictatorship may be better than anarchy (for a time at least).
As to China: Yes it seems (for now) richer than many democracies. However,
1. It is all now going to hell, though I suspect the system was rotting for a very long time, it is just now too rotten for CCP to be able to hide it anymore.
2. I am not a specialist on China, but as far as I know, communist China is a society divided into classes, where citizens of first tier cities enjoy (or enjoyed until recently) western level of life or better (though far fewer rights), but rural China is still a very poor third world, with peasants having even fewer rights than urban Chinese. So China is very rich in some places, but very poor in other, and comparison with other countries is complex.
3. While I would prefer China to to a complete mafia ridden anarchy, I would still prefer living in a much poorer democratic country enjoying protection of law against vagaries of government and fellow citizens: It is better to be poorer but secure in what you have, than very rich when your property can be taken from you any moment.
4. It is hardly a miracle that China developed very fast after insanity of Mao, after they introduced some sane economic reforms, permitting private initiative by citizens. It is telling though that Chinese policies were more or less sane (not completely, of course, see the demographic policies, three gorges dam, etc) as long as there was some internal democracy within the party. Yes, it was "collective decision making and balance of powers, and free exchange of information" only for the very narrow elites (not even the rank and file of the party) but it existed. A fast decline correlates nicely with Xi taking over and eliminating internal criticism, balance of power and collective decision making.
And let's not forget the time virtually every Western democracy put its entire population under house arrest for an indefinite period of time. So much for "protection of law against vagaries of government".
Without going into discussion whether this was necessary (I think it was, at least initially) there was some effort to compensate businesses for lost income, unlike in China. Also, even the toughest lockdowns in the west did not involve literally welding doors to people houses as actually was quite common in China. Also lockdowns ended relatively quickly after vaccines were available (it would end much quicker if not for Omicron). In China lockdowns ended only at the end of last year when the west already forgotten about masks and lockdowns. It is a pity people underestimate how hard can the situation be in authoritarian countries, and then they say: yes our freedom are also infringed, it is the same or worse as on autocracies. No, it isn't. It really isn't.
Firstly, even if our lockdowns didn't go quite as far as China's, they would still have been regarded as cartoonishly totalitarian just a few years ago, and so are still a valid counter-example.
Secondly, China's just one country. Were the lockdowns in other authoritarian countries, like Russia or Singapore, notably more severe or brutal than those in the West?
This book is arguing they are the only thing that is important. Pretty strongly too. And poorly.
I would love to take them and slap them in Antarctica with a bunch of amazing institutions and see how the economy develops. Better yet if we can do it with them and a bunch of afghans or Somalis.
> I would love to take them and slap them in Antarctica with a bunch of amazing institutions and see how the economy develops.
This sounds intuitive, but it runs into the problem that, for example, sub-Saharan countries were widely predicted to have brighter futures than South Korea because of their superior natural resources, or that Iceland was very successful by establishing itself as a finance hub. I believe Singapore established itself as an oil refinery, despite having no oil production.
In the case of Singapore, that worked well in part because Singapore is very strategically located. But Iceland isn't. There's a lot of work that can be done anywhere. Korea is a good place to grow grain - like Iceland! - but if it had to import all of its food, it would still be a rich country.
What’s the problem? No one is claiming geography is everything. But it isn’t nothing either.
Iceland was already a fairly successful country, there isn’t much to explain in terms of its development. Well off countries with small populations have lots of options for parasitizing off the larger global economy.
The problem is that geography is the only reason to expect an Antarctic colony to fail. By implying that it will, you're endorsing the idea that geography is everything.
Iceland actually is relatively resource rich because of the cheap electricity, fish, and natural beauty. It has very cheap electricity (they produce more electricity per capita than any other country) because of the natural environment that allows for extensive hydro power and geothermal power. That cheap electricity means that aluminum can be made very cheaply and exported. Iceland also catches a huge amount of fish, more than the UK (which has 200 times the population!). And the natural beauty draws a large tourism industry. Those three things alone are more than half of the GDP, and all would work without it being a finance hub.
Of course, it does have a finance hub, but that happened after it was already getting rich from those resources. And it was historically resource-poor, since it didn't have the resources to bootstrap those industries, but after it got investment from other countries it was able to succeed.
> Iceland also catches a huge amount of fish, more than the UK (which has 200 times the population!).
But Iceland doesn't have 200 times the amount of fish that England has, so it's not immediately obvious how we should interpret this fact.
It looks a lot like "in England, they've got better things to do than catch fish, but in Iceland they don't", which would make Iceland a poor country, not a rich one. Kind of like arguing that some hypothetical country's huge production of shepherd's crooks meant that that country was an industrial powerhouse.
Catching fish might not be as profitable per person as finance, but it's certainly not a poor-person activity like sheep herding. There's big money in it.
The real reason Iceland catches more fish than any other European country is because it's got a) a long cultural history with associated support from government and b) a huge, productive section of ocean all to itself. Same with Canada and Alaska.
It’s really too early to say anything about China. At the moment the group-think in the west seems to want to believe that there’s a permanent slowdown to very low numbers. The recent hysteria is based on one quarter of gdp increases, which was then annualised.
Um, no. The group think was that China is exceptional. The west is now waking up to the reality, which is not based just on GDP data, but many other economic indicators. All of this might not have fatal, if not for the insane politics. Xi is destroying private market in China (such as it was). And there is this:
I do not need to know anything more than that to understand that this is very bad, and the era of "forget about politics, earn money" is over. Maybe it won't be as bad as during Mao (let us hope for the sake of Chinese citizens), but regardless of economic crisis China is now dragged down by Xi into a nightmare faster and faster
China is little different in authoritarianism than when Xi was feted in the west. If there was a groupthink then, the anti Chinese rhetoric is clearly another form now.
First, do you seriously believe those numbers? Or any official data coming from authoritarian regimes, not just China? Incidentally, they stopped publishing some economic indicators (like about unemployment) which are so bad they cannot be even realistically falsified. And yes, authoritarianism in China a few years ago was already horrible, but it can get far worse. But yes, the West ignored the China's and Russia's authoritarianism and human rights violations because it was good for business. And then comes 2020's and the sudden realization that all this profit also feeds hostile militaries, and also that perhaps putting your vital production facilities in, or becoming energy dependent on a potentially hostile country which does not respect property rights and has nuclear weapons is not the brightest idea. And if this was not argument enough, at least in case of China Covid closures, industrial espionage and hostile political climate soured business relationship. So yes the West was stupid and shortsighted, but now at least it is able to look at China without pink glasses.
I do accept the GDP figures. Precisely because they do in fact curtail other data.
What you are saying in your last paragraph is that you are ok with bad dictatorships if they are on your side. There’s no morality there, so let’s not pretend there is.
My feeling is that the west (ie America) is actually panicking about losing total dominance across the world. If China were as authoritarian internally but not challenging American hegemony then the concern about internal repression would be non existent.
We know this because when Xi visited the U.K. not that long ago he got the biggest state visit in U.K. history and few protests.
At that time the Western media had not decided that China was the new existential threat, it was probably still Islam. Anyway at least you admit that you were not always at war with east Asia.
> What you are saying in your last paragraph is that you are ok with bad dictatorships if they are on your side.
I said no such thing. I pointed out that the already morally reprehensible decision to do business with China came back to bite the West, and so it was not just immoral, but also irrational. Please do not put in my keyboard opinions which are not there. It is unfortunate (but constantly repeated error) on the side of many western powers to ignore human rights issues when it seems to serve their short term interest. It is never a good policy long term.
Communist China will not dominate the world (future democratic China, why not, maybe, I have nothing against). But before it falls hard it can do a lot of damage to their own people and other nations
I don't believe that China GDP figures reflect reality.
I tend to believe Noah Smith who says that China is in big trouble. It has had a good growth and everything but it is going to hit a wall.
Something similar happened with the Soviet Union. It had industrialization, a good growth and everything. And yet it had immense structural problems and people couldn't enjoy this growth due to constant shortages, lack of free market produced a lot of consumer goods that people didn't like. Ultimately it hit a wall and crashed.
The "sudden realization" did not come in the 2020s. Trump ran his whole campaign on de-globalization and "tough on China" stances in 2015 and 2016. It just took until the 2020s for the elites to realize he was right.
There were many people criticizing business relations with China even long before Trump, they were just not mainstream enough to influence the policy. I am not sure Trump took "tough on China" policy for the right reasons:
I do not appreciate his judgement of Xi character above (wrong and creepy in the mouth of former, and what is even worse possibly future president of US), but, yes, in his tough on China policy he was generally right (I cannot judge details of implementation). I doubt Trump was some sage seeing deeper than others. I think of him rather like a randomization procedure, and as machine learning teaches us such procedures are often very useful for escaping from local minima (when used in moderation!). In this case the "random" choice was spot on, and helped to break the spell:
Still, the real jolt came with Covid, when people saw how vulnerable are supply chains, and that economic hyper efficiency which excludes security is not the path to economic development but to early extinction.
"Political insitutions" are not fundamental. They're downstream of many other things, like genetics and culture. It's absurd to talk about the "nordic model" as independent of nordic PEOPLE. Haiti can not and will not ever have the 'nordic model' implemented in their country, regardless of who's in charge and how much power they have, because such a 'model' depends on a kind of people which categorically do not exist in Haiti. There's a lot of ways in which this is true, but having the raw economic output required to fund such a model (which must necessarily come before such a model is established - you can't pay for anything otherwise) is surely the most basic. But then of course there's having good people who don't like violent crime, people with low future time orientation, people capable of building high trust societies etc, basically everything that was selected for in Northern Europe during it's inadvertant eugenics program (i.e. it's capital punishment heavy justice systems of the past).
But anyway, this is a strong review compared to most others if only for it's brilliant brevity.
Which place in the world didn't have capital punishment heavy justice systems in the past? Haiti certainly did when it was a slave colony, and one of the most brutal to ever exist at that.
Mercifully to the point, on-topic, readable, and no digressive distactions. Understated unobtrusive humour a plus. I don't really mind the lack of "And the moral of the story is" galaxy-brained extrapolative conclusion which is a regular feature of ACX book reviews, since those so often get out over their skis in ways that detract from the main course. Solidly approve.
I've thought from the outset that there will be a bias in favor of gushing and enthusiastic reviews, and have been awaiting an ambivalent one to see if it will suffer from shoot the messenger syndrome!
I strongly approve of the honesty and don't mind a review that says "not worth your time." If I were someone looking for a book of this type, he just saved me a bunch of hours by referring me to the actual economic studies that better answer the questions.
I feel like the conclusion of "Don't read this book of an extremely well respected economist who is likely to get a Nobel Prize because he's wrong about his life work, and you should not put his ideas into practice" counts as a moral of the story galaxy-brained extrapolativr conclusion. Not a knock on the review, just pointing out that that conclusion felt par for the course for an ACX review.
Isn't that just an appeal to authority? Seemed well-demonstrated to me that while the actual empirical backing in research papers x, y, z is quite good and accessible, the book itself bungles the translation by trying to simplify and narrativize things for a Popular Audience...while also missing key beats of the popsci genre, like actually being interesting and engaging to read for a non-SME. As the review says, why read 500 pages of uninspired circular prose when the papers it's based on are way shorter and more illuminating? Compare to, say, last year's winner The Dawn of Everything, where David^2 are widely agreed to be wrong about much of the evidence, but it's a very fun read and one of those wrong-useful models anyway.
More than that, I think it's useful in general to have some negative reviews thrown into the mix. Some reviewers really like the tomes they review, but others really seem to stretch for positivity bias...not wanting to diss the Famous Well Regarded Author/Book, thinking it must be a problem with them rather than the text, etc. Life's short and most people don't read at Tyler Cowen's pace though - I'll take a strong signal (in either direction) over caveated qualified praise.
Very fair review. Why Nations Fail was very disappointing. It was vague and rambling, and while I didn't come away thinking they were wrong, I didn't come away thinking they were right either. It was generally difficult to figure out what their thesis even was, at any detailed level, and whether they had presented any kind of evidence to support it. I wasn't inspired to put in the effort to try to answer those questions, so thanks for having done so. My main take away was "why are these guys so famous?" - so I'm glad you addressed that as well. I'll check out some of their papers, as you suggest.
I did this book as part of a reading group recently, and thought it was pretty much pure sophistry. So much construction of tautological frameworks of technical terms that mean nothing (is “institutions” is mostly just a way to smuggle in “culture” without hurting peoples feelies).
The arguments against geography or other elements were nearly wholly absent and unconvincing where present.
The historical examples seemed a little cherry picked and when there were counterexamples often just hand waved away through definitional high jinks.
The book mostly doesn’t touch very clearly the few examples of actual economic growth/development we have, nor how the “extractive/inclusive” framing is at all helpful other than as a way to smuggle in prior assumptions/values.
Anyway, just reinforces my priors that the people in these (admittedly difficult) fields are still in the absolute wilderness.
Anyway I had a whole giant word document of notes and criticisms, maybe I will find it.
AR measure extractive institutions vs inclusive in very narrative way, that's my biggest critics
As thought experiment imagine:
- In Kolechia all young people are forced to pay 1/4 of their income to old people, weighted by their social status
- In Arstotzka education system sets kids on rigid tracks to certain social class very early, making it hard to change and forging perfect ideology for that
- In Antegria there kids are forced to go at nearby school
- In Obrastan half of state jobs pay basically for burocrats existing
All of that exists in first world as well and AR seems not to make questions why certain institutions
"Like, you can describe nearly every modern liberal democracy as money pump extracting 1/4 of young people labor to pockets of old"
Where do you get 1/4?
I understand the basic principle, but in the US Social Security is about 12.4% (half 'paid' by the employee and half 'paid' by the employer). Bu this is capped at about $160,000 of income. Then we have some Medicare taxes. But I'm not getting to 25%.
In Germany pension tax is 18% + about 2.5% gdp in subsidies from budget
With 18% the point stands, it stands even with 12.4%
It's still more than typical 10% paid by serfs to landlords, which AR mentioned as "highly extractive system"
The collective beneficiary and their approximate overlap with exploited doesn't change it for them, they also call USSR and Spanish public works in colonies as extraction institutes
And 20% is pretty close to 1/4 anyway. So higher taxes in Germany (which is west!) makes sense.
If you want to, you can even point to US tax policies such as Prop 13 in California as effectively on average a transfer of money from the young to the old. This would boost the US transfer number a bit.
Let's not forget the actual "fine print" reason for Prop 13—i.e. it kept property taxes stable and low for commercial real estate. The corporation that owns the giant office campus I work at pays the county less in taxes than I pay on my California bungalow because they're still paying the same tax rate that they were paying in 1978 (with 2% increases) than I pay for my house (purchased much more recently). Prop 13 was functionally a bargain that its corporate backers made with CA homeowners at the time to keep their taxes low for all time. So it favors elderly homeowners who've owned their house the longest, and corporate real estate owners who sit on real estate and extract rents.
In Germany, the 18% pension tax are only the tip of the iceberg if you want to talk about inter-generational justice.
The (non-private) health insurance is paid both by pensioners and workers (both effectively pay 14.6% in health insurance) and 3.4% nursing insurance. It seems likely that the younger workers subsidize the health care of the pensioners.
(Also, because simply deducing these from the paycheck would not satisfy the German love of over-complicated solutions, the "Lohnnebenkosten" are split roughly (see Wikipedia for all the gory details!) 50-50 between the employer and the employee. So if you earn X on paper, the employer pays an additional 21% of that, and then you get X*(1-21%) minus taxes in cash. The gap between what your employer pays for you and what you get out is thus not 21%+21%. It seems like every euro you earn (before taxes, after deductions) costs your employer 1.5 euro. Also, I am very much not a tax lawyer.)
I think in static times, such a system in which the currently employed pay for the current pensioners works fine: if you are a cowherd, and your grandfather was a cowherd, and his grandfather too, and the population size in your village has been stable for a few centuries, nobody can complain, and it certainly beats people having to hoard gold to survive in old age.
If the population pyramid looks nothing like a pyramid, the pay-as-you-go system starts to resemble an Ponzi scheme. (The population "pyramid" also affects the size of various voter blocks, so politicians can afford to increase the costs of university education while cutting pension subsidies will go badly with key demographics.)
(As a formerly young person, I can not complain too much about this personally given that my parents paid for my lengthy education, but I would totally understand any young person who paid for their education with side jobs or debts feeling some degree of resentment towards today's pensioners who studied under more generous tax-funded programs and then voted to burn that bridge after they had passed it. Add to that that a 17yo has no say over the continued running of coal plants while a 70yo has their vote, and I can see some reason for inter-generational conflict even without differences in home ownership rates etc.)
>>> But by any ordinary meaning of "technological change" this statement is patently ridiculous: horses were replaced with tractors, employment shifted from agriculture to industry, the production of steel, electricity and machine tools grew exponentially, and city dwellers moved into highrise apartments with radio, TV and refrigerators.
Soviet manufacturing was heavily dependent on buying/stealing technology from the West. Machine tools were largely purchased from (West) Germany. Soviets and then Russia never tried to wean themselves of Western precision machine technology and create their own machine tools. Soviets were in the same boat with computers. They copied Western designs using Western-sourced parts. They continued using vacuum tubes in electronics long after the rest of the world mostly abandoned them. Starting in 1929, the Ford Motor built and managed soviet car and tractor manufacturing plants. They sent senior engineers and managers over from the US to manage these plants. US companies largely kept Soviet war production up and running after Hitler invaded the USSR. Likewise, the Soviets had to steal the plans for A-bombs and then H-bombs from the US. They also stole the plans for plants that processed the materials for these weapons.
In fact, I can't think of any original technology that came out of the Soviet Union or post-Soviet Russia. Not that they don't have excellent engineering schools and universities. But they didn't/don't have a culture that allowed innovation. That was was an institutional and cultural failure on the part of the Soviets — and then the Russians.
"Soviets were in the same boat with computers. They copied Western designs using Western-sourced parts."
I am, G*d help me, going to speak up in defense of the Soviet computer engineers.
Until around 1970 the Soviets had their own computer designs and were actually making computers of their own design rather than just copying western models (e.g. 8088, PDP-11, VAX). Then the folks in charge of the entire Soviet economy decided that this was uneconomic and that it was cheaper/better to steal western designs and reverse engineer them.
So that's what happened.
But prior to this time the Soviets were designing their own computers. One example would be the BESM-6.
Were the Soviets able to keep up with semiconductor manufacturing technology? No.
And their domestic design bureaus were (mostly) killed off by their central planners.
But it isn't as if the Soviets *only* copied western designs for computers. They eventually (mostly) did, but through about 1970 they created (and tried to manufacture) their own designs. Heck, they even built a ternary computer at one point!
Reactive armor (for tanks) seems to be a Soviet invention.
I expect that there are others.
Not as innovative as "the west," but not entirely derivative, either.
I had forgotten that chapter in Soviet computer design. Thanks for keeping me honest! And for some reason, I thought reactive armor was an Israeli invention—but, yes it was an invention/idea that Soviet engineers came up with—but I guess they never exploited it. So, I think these are perfect examples of institutional failure that the reviewer had trouble swallowing. OTOH, Soviet and Russian engineers have always been masters of the KISS principle because they worked under constraints that Western engineers didn't have.
"In fact, I can't think of any original technology that came out of the Soviet Union or post-Soviet Russia."
I suppose it depends on what one counts as a technology, but Sputnik and Gagarin preceded their western equivalents. And no other nation has taken photos on the surface of Venus.
Very true about the V2! And that, in turn, built on Goddard's work. This is why I put in the qualifier about what counts as a technology. Just about any technological advance has precursors. Also, despite the jokes about "their German scientists got ahead of our German scientists", https://en.wikipedia.org/wiki/Sergei_Korolev was important in the Soviet's space program.
( None of this is to praise the Soviet system, just to note that beowulf888's "In fact, I can't think of any original technology that came out of the Soviet Union or post-Soviet Russia." is an overreach. )
A-bombs were stolen, but I don't think H-bombs were. They had to come up with those themselves (though they knew it was possible). America also didn't join the war until some time after Barbarossa, with Lend Lease taking enough time to arrive that they basically won Stalingrad by themselves.
In late 1940s, Klaus Fuchs was working in UK coordinating with US on H-Bomb development while passing secrets to Soviets. Whether Soviets could have figured it out on their own is another question, but some have argued that Fuchs gave them info that significantly sped up their H-Bomb program...
Stalingrad fought from Aug 42 to Feb 43. By that time Lend Lease was in full swing.
Josef Stalin toasted the success of the Lend-Lease program at the November 1943 Tehran conference with Churchill and Roosevelt...
"I want to tell you what, from the Russian point of view, the president and the United States have done for victory in this war. The most important things in this war are the machines.... The United States is a country of machines. Without the machines we received through Lend-Lease, we would have lost the war."
In memoirs, Nikita Khrushchev said the same...
"If the United States had not helped us, we would not have won the war," he wrote in his memoirs. "One-on-one against Hitler's Germany, we would not have withstood its onslaught and would have lost the war. No one talks about this officially, and Stalin never, I think, left any written traces of his opinion, but I can say that he expressed this view several times in conversations with me."
So what. The technology changed even if it was “stolen”, borrowed or bought from the west. The idea that there was no economic or technological change in the Soviet Union from 1917 to the end is preposterous. At the time it was rated as the worlds second or third large economy. Hence “super power”.
Yet for some strange and unknowable reason the Soviet Union collapsed.
As for being a superpower, that mostly depended on ICBMs with nuclear payloads and projecting a show of military strength. ) The Soviets inflated their own economic numbers. They couldn't produce enough food to feed themselves despite owning one of the best grain-growing regions of the world (Ukraine). They did have the national skill of creating Potemkin villages, though.
And even if it were a superpower at its peak in the 1960s and 70s—post-Soviet Russia's invasion of Ukraine has shown that didn't have the institutional organization to maintain their superpower status.-
Clear, well-written, straightforward, and understandable. I tend to prefer reviews that are enthusiastic about the book they're reviewing, but sometimes when you set out to review a book, that just doesn't happen. And if we never see those reviews, that way lies p-hacking and the replication crisis. I very much appreciate the constructive approach to disagreement, where the reviewer pointed out papers by the same authors which made the authors' point better than their book. That feels like a behavior that I want to encourage and reward in these book reviews.
I would prefer a bit more of the original text, and relatedly I don't feel I got a visceral sense of what the book would read like to someone who agreed with it. But that feels like a nice-to-have. It certainly would have made the review longer, and I have to respect the brevity of this one.
The book:
Like I said, I don't have a good sense of it. I've read some books that had that "Old Testament" feel that the reviewer describes, so I have to assume that it's like that. The best ones were presenting concepts that currently defy human description, while the worst were propaganda for an ideology. I get the impression that this was closer to the propaganda side, but without a coherent ideology to back it up.
What is "inclusive" and "extractive"? What is upstream of "institutions"? Do good "institutions" ever fail and do bad "institutions" ever succeed, or are they defined in terms of their success and failure? There were some basic questions here that didn't seem to have answers in the review, and the review leaves the impression (or outright states) that the book never answers them either.
What I really want from this review is more time spent on how AR define "institutions", "extractive", and "inclusive". I feel that without a better sense of what AR mean by those terms, I won't understand what the book is saying.
I read the book about a year ago. The biggest problem with it is that it's extremely boring and repetitive. The second biggest problem is that the definitions of "inclusive" and "extractive" are circular. It seems like they've done this deliberately in an attempt to make it understandable to a popular audience, but it results in it being really dumbed down, and makes points that are either obvious or unconvincing.
They use "inclusive" and "extractive" for both economic and political "institutions". By "extractive economic institutions" they mean economic conditions that result in elites being able to extract wealth for themselves while impoverishing non-elites. The argument is that non-elites have no incentive to be more productive as any excess wealth produced will just be extracted by the elites, and no economic mobility as existing elites will leverage the institutions they control to prevent anyone else from becoming elites, the result is that the total wealth of the society will be lessened. This is the obviously true part.
They give examples of economic institutions that lead to extraction, but they never really give a synthesis of what all these examples have in common that leads to them being "extractive institutions", other than that they all lead to extraction, which is why they have had to rely on a circular definition.
By "extractive" political institutions they mean political systems that inevitably lead to "extractive" economic institutions, by which mean non-democracies vs democracies today, slave colonies vs free colonies in colonial times (e.g. Colonial Peru vs Colonial Australia), and Medieval/Early modern societies with greater aristocratic rights vs the monarch, and greater merchant and peasant rights (e.g. England vs Spain). "Extractive" is a very forced term here when "exclusive" would have been more appropriate, but you can see that the definition of "inclusive" vs "extractive" political systems is more coherent. To be "inclusive" means to have more rights and power in the hands of more people, which will result in economic institutions being shaped to the need of non-elites. The problem here is that by forcing the "extractive" term on these political institutions, they are already asserting that these will necessarily lead to "extractive" economic institutions. It seems obvious that what would be better called "exclusive" political institutions are more likely to lead to "extractive" economic institutions, but it's not obvious that this will always be the case, so I find it hard to justify this choice of definition.
Some of this might seem like a nitpick, but it's not, because use these terms practically every second sentence, which even if there were no problem with these terms, would be enough to make the book trash.
For a much more interesting analysis of the causes of growth-enhancing vs. growth-inhibiting institutions, I recommend "Systemic Vulnerability and the Origins of Developmental States: Northeast and Southeast Asia in Comparative Perspective" by Richard F. Doner, Bryan K. Ritchie, and Dan Slater, published in International Organization 59, Spring 2005, pp. 327-361. Their abstract:
"Scholars of development have learned a great deal about what economic institutions do, but much less about the origins of such arrangements. This article introduces and assesses a new political explanation for the origins of "developmental states"—organizational complexes in which expert and coherent bureaucratic agencies collaborate with organized private sectors to spur national economic transformation. Conventional wisdom holds that developmental states in South Korea, Taiwan, and Singapore result from "state autonomy," especially from popular pressures. We argue that these states' impressive capacities actually emerged from the challenges of delivering side payments to restive popular sectors under conditions of extreme geopolitical insecurity and severe resource constraints. Such an interactive condition of "systemic vulnerability" never confronted ruling elites in Indonesia, Malaysia, the Philippines, or Thailand—allowing them to uphold political coalitions, and hence to retain power, with much less ambitious state-building efforts."
It is worth noting that some of AR's empirical work has not aged well. Here is a critical comment of considerable length that was published in a top economics journal.
Geography does matter: all else being equal, it would be a lot harder for Chad to be rich than for France to be rich because Chad is not a very desirable piece of real estate for humans, while France is really nice.
It would seem like a study of the impact of institutions might look at relatively comparable countries, like central America. I wouldn't at all be surprised if some Latin American countries have more predatory ruling elites than others and that the nastier the rulers, the worse the economic performance of, say, the median citizen. But ranking the institutions of Central American countries and seeing how their economic performance correlates seems like a task for a historian or area expert rather than an economist taking a 35,000 foot perspective of all the countries on earth and deciding that, by definition, those with worse economic performances must have worse institutions.
In this century, a heartening economic performance has been that of Panama, which is considerably more prosperous than it was in 2000. I presume it has to do with Panama successfully executing a big project from 2007 to 2016 (only two years longer than originally hoped) to expand the Panama Canal and thus the fees it collects from shipping. I don't know if the project will pay off in the long run (it depends to a large extent on American imports from China continuing to increase, which can't continue forever), but it seems to have been more competently implemented than, say, the embarrassing California High Speed Rail project that was passed a couple of years later.
I may just be ignorant of sordid details, but in general Panama seems to have had a vigorous open public debate over the project, followed by a democratic referendum endorsing canal expansion by about 3 to 1, then a reasonably quick construction project, and the greater shipping was seeming to benefit the economy, at least up until covid confused matters. That seems on the surface as if Panama developed some reasonably functional institutions to allow it to carry this out. It would be interesting to know more about how a country in a region with notoriously extractive institutions traditionally achieved what seems like impressive maturation.
"...it seems to have been more competently implemented than, say, the embarrassing California High Speed Rail project that was passed a couple of years later. "
You are just saying that because Panama spent only $5.4 billion on this project and actually got the desired expansion while new estimates for California High Speed Rail final costs seem to be ~$135 billion (up from $33 billion when Prop 1A passed) and 15 years after approving the project we still don't have anything resembling high speed rail.
But if the competence in question is directing money to favored constituencies, however, I can make a good case that California's High Speed Rail project is much more of a success.
I think Panama is rather unique in that it is a tiny (~4M people) country located optimally to build that famous canal. The state of Panama was backed from the beginning by the US which had a considerable strategic interest in the Canal (and ran it until 1999).
Other special cases include Hawaii (also US geostrategic interest), Kuwait (Oil), Israel (Immigration of highly educated people, US backing).
So if Panama is doing great, good for them, but unless you can get the US to do similar investments in every other country in the Americas, the lessions from Panama do not seem very transferable.
Panama appears, at last glance, to be exploiting its geographic advantage reasonably well, which is more than quite a few countries can say. I wouldn't have bet on Panama doing that much, but I'm happy to say I appear to be wrong (I hope).
Dollarization is useful in itself and as a signal of a safe and pretty much no questions asked business environment. Maimi but not subject to US law. They were the “Panama Papers,” not the “Denmark Papers.” And a pleasant place.
It doesn't matter relative to the huge disparities we're seeing today. French GDP per capita wasn't much different than Africa's in 1AD. By 1000AD, the average African was producing half of what the average Frenchman produced. Today, the average African produces 1/20th of what the average Frenchman produces. The geography of these countries hasn't changed much over this period, so there's got to be something else going on that explains the huge divergence in terms of per-person production.
I am not sure the 1AD figures are very reliable. More importantly, if economists know anything they should know that small differences compounding over a long time can lead to a big impact.
Say France geographically is only 5% more productive per generation once you have ironworking.
Well for a long time places will look similar. But eventually you will see huge divergence. I for sure don’t think geography is the sole determinant, but the people arguing it is nothing are just being silly.
If you swap the position of British North America and Brazil, the new British colony in SA ends up much less rich, even mandating the same institutions.
"If you swap the position of British North America and Brazil, the new British colony in SA ends up much less rich, even mandating the same institutions."
Does it? I can imagine few worse places to build a country than the barren wasteland that is British North America (by which I assume you mean modern Canada). The lush Amazon rainforest, meanwhile, abounds in resources. Brazil is certainly a much more hospitable place than Iceland, Norway, Sweden, and Finland, yet those are among the world's most prosperous and most well governed countries.
Where does `manifest destiny' stop in this counterfactual history, and is there any good reason to believe that it stops at the borders of modern day Brazil?
ETA: Sounds like a fun alt history actually. I'd read that novel, if one were written.
I'm not really sure why geography is giving a stacking benefit that increases each generation. The geography isn't changing.
If we take the interplay between geography and technology (defined broadly as the ability of humans to react to their environment) then I totally agree that this matters a lot for GDP. And it makes sense why humans could, each generation, improve their situation even as the underlying geography stays the same.
By way of example, Miami has had the same geography forever. In 1896, Miami had ~300 residents. Today, it has over 400,000 residents. What happened in between? In 1897, it was discovered that malaria is spread by mosquitoes. Florida undertook a massive anti-malaria campaign, which lasted decades. That transformed Miami and made it the city we know today.
Applying a fixed per-generation multiplier really misses the point. Geography presents challenges that can be overcome by technology (defined broadly). New technologies present new opportunities that can be exploited, according to human needs, which are largely socially defined (so Florida can take snowbirds fleeing New York, who wouldn't want to move to Madagascar, even if Madagascar eliminated malaria).
I think you're correct that swapping the position of British North America and Brazil would make the new British colony poorer, but if you brought the residents of Silicon Valley and America's hydrocarbon reserves, I think the drop would be pretty negligible.
After all, Saudi Arabia has some of the worst geography on the face of the Earth and they're swimming in money.
That makes sense, but I'm not sure that matches the historical data? Singapore had a population of 150 as late as 1820. Meanwhile, ancient Egypt had a population of 6.5 million people and was the breadbasket of the Roman Empire. Today, Singapore is much, much, much richer than Egypt.
I'm not sure that looking at the geography of a place tells you that much about its success in today's world. Likewise, its population and wealth in, say, the 1800s, only sometimes tells you about its population and wealth today. The richest countries all seem to be complete outliers, as though there's something else going on beyond just their innate starting advantage.
Because there are a lot of public monuments from that period in France, and none in most of Africa.
> Setting aside the problem inherent with comparing a small portion of Europe to an entire continent.
Europe and Africa are both "continents", but not of similar scale. Africa is three times the size with a better climate. It appears to have roughly double the population of Europe.
I'm not sure about Africa having a "better climate." Obviously Europe is cooler, but I'm not sure there's a consensus about what the best temperature is for human thriving. Bugs/disease, growing seasons, specific crops, lots of things are different between the two - not to mention a huge desert. We could even make up a Just So story that says Europeans had to work harder to keep warm in the winter while Africans were encouraged to work less and not overheat. Add in some generations and Europeans are hard workers while Africans are not. Again, it's just a made up story but could mean that cooler weather is actually better.
Africa is a better climate in that the same amount of effort produces more food. Specific crops are not relevant to this question; you want to use whatever is best suited to wherever you happen to be.
The desert is obviously an exception, but most of Africa is not that. Egypt is an exception to the exception of the desert.
Bugs and disease are problems, though much more problems for foreigners attempting to live in Africa than they are for Africans living in Africa. The Africans are more inhibited by the megafauna, which funnily enough is not so much of a problem for incoming foreigners.
But neither microfauna nor macrofauna factor into the climate. The African climate is good. There are some non-climatic environmental problems.
I'm getting it from Angus Maddison (surprisingly not a Scottish dating website for cheating spouses). That's the only data set I could find on the topic. So to the extent that the data aren't credible, I'm not sure I have much of an alternative.
I'm looking at Angus Maddison's final data release (2010), and I see that the figure for "Africa" is based on estimates† for the following locations:
Algeria, Egypt, Libya, Morocco, Tunisia.
Mentioned as being part of Africa, but with no data present at all, are the following:
Angola, Benin, Botswana, Burkina Faso, Burundi, Cameroon, Cape Verde, Central African Republic, Chad, Comoro Islands, Congo 'Brazzaville', Ivory Coast, Djibouti, Equatorial Guinea, Eritrea, Ethiopia, Gabon, Gambia, Ghana, Guinea, Guinea Bissau, Kenya, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mauritius, Mozambique, Namibia, Niger, Nigeria, Rwanda, Sao Tome and Principe, Senegal, the Seychelles, Sierra Leone, Somalia, South Africa, Sudan, Swaziland, Tanzania, Togo, Uganda, Zaire, Zambia, Zimbabwe, "3 small Afr.".
(Omission of Madagascar doesn't really matter since it was unpopulated in the year 1. The same cannot be said of the rest of the locations.)
The definition of "Africa" used for the 1 AD estimate is a close match to what a Roman in 1 AD would have understood by the word, but it is essentially unrelated to the use of the same word in modern English. There should not be an estimate for "Africa" for this year in the data sheet at all.
† Actually, something else is clearly being taken into consideration, since there are only two regional estimates for the year 1000 (Morocco and Egypt), but the estimate for "Africa" that year is lower than either. Still, we can see that the data overwhelmingly doesn't exist and the pan-African estimate won't pass a laugh test.
Sure, so then let's just modify the statement to apply to the Maghreb. They started at parity with France in 1AD. Today they're vastly dissimilar. The geography hasn't changed.
There is one way in which the geography has changed - Egypt in ancient times was powerful because of its immense agricultural productivity (still valid) and its vast stores of gold (long since mined out; possibly these were already gone by the year 1).
For a more serious answer to your question, I would guess that mostly what happened is that population density in France rose. The Mediterranean shore was settled early on by highly commercialized people. This gave it a head start; when you look at 1 AD you're not seeing a steady state. The Maghreb is closer to its full potential than France is. (You can read Julius Caesar, a few decades prior, describing the social and political structure of Gaul - it is not at all what we would consider mature.)
I would also agree that different institutional histories (including the present day) play a very important role. But France is better territory than the Maghreb is, so quite a bit of divergence is to be expected based on the geography.
To be fair, I believe that over-grazing has made North Africa a good deal less fertile than it was in Roman times. So the geography has in fact changed, albeit probably not enough to account for all of the divergence.
Nobody sane claims that climate is totally irrelevant, there is a reason why the population of Antarctica is so low compared to other continents.
Still, geography/climate can be overcome.
You can have a big city in the Mojave desert. (Las Vegas)
Or a smallish group of humid tropical islands previously featuring some fishing and agriculture can become one of the leading high tech nations. (Taiwan)
I think we have to get specific about what it means to "matter". I'd defend the claim that our social environment (of which institutions are a part) can overpower any geographic advantage or detriment. For any place on Earth, the meaning of geography is subject to a veto. If the need is great enough, humans will make it work.
For many places, no such social environment exists, so geography carries the day. By way of example, offshore oil rigs cost hundreds of millions, if not billions, to build. But we could, in theory, deliberately build them in lots of places that we know lack oil. No one does this, because it's a huge waste of money. That's not because the geography prevents this - the oil-lacking places aren't less hospitable than the oil-rich places - it's because there's no good economic reason to build an oil rig that doesn't produce oil.
So geography matters if, and only if, our institutions (I'd say social environment, but whatever) decide not to overpower the effects of geography.
I also enjoyed a number of @pseudoerasmus' tweets on their other work like "The Narrow Corridor", but he locked his Twitter account.
Showing the causal effect of colonialism based on tropical diseases (as if that couldn't have an independent effect) rather than using non-colonized countries like Ethiopia & Thailand as controls always struck me as laughable.
Here's part of my review of "Why Nations Fail" from 2012:
To understand Acemoglu’s professional popularity, you have to grasp how awkward the major features of global economic reality are to careerist economists. If you look naively around the world, you might get the impression that, say, Chinese territories such as Taiwan, Singapore, and Hong Kong have been economically dynamic because they have a lot of Chinese people in them. Moreover, the Overseas Chinese control much of business in Southeastern Asia, so we might assume that the Chinese tend to have a lot on the ball wherever they go.
The epochal conclusion that Deng Xiaoping, urged on by Singapore’s Lee Kuan Yew, drew from this in the late 1970s was that if all the Chinese folks in the world were getting rich except the Maoist Chinese, the problem must lie more in the “Maoist” than in the “Chinese” part. And, indeed, once liberated from Mao’s dogmas and whims, the Mainland Chinese responded with one of history’s greatest economic surges.
To an economist looking for invitations to conferences, however, the danger of adopting the Lee-Deng perspective is its flip side: Some other peoples, such as black Africans, New World Indians, and Pacific Islanders, have tended to lag notably behind Northeast Asians and Europeans, whether at home or abroad, and under all sorts of ideologies and institutions.
Acemoglu’s contribution was to come up with a regression analysis that, he claimed, showed that Third World poverty was the fault of those all-purpose bad guys, European imperialists. In colonies where early Europeans settlers faced low risks of dying from tropical diseases (such as Massachusetts), they set up good “inclusive” institutions. But in colonies where white men died like flies (such as Nigeria), they set up bad “extractive” institutions.
Institutions are (practically) everything, you see. If, say, the Central African Republic is poor, it’s not because it’s a republic in Central Africa (or because poverty is the default condition of humanity), but because it has extractive institutions. And that’s because Europeans didn’t set up inclusive institutions for the Central Africanese.
If Australia or New Zealand or Canada are richer than the Central African Republic, it’s not because Australia or New Zealand or Canada are full of Europeans, it’s because the Europeans hogged the inclusive institutions for the places they colonized. Or something. Acemoglu wrote:
"These results suggest that Africa is poorer than the rest of the world not because of pure geographic or cultural factors, but because of worse institutions."
According to Acemoglu, that’s pretty much all you need to know.
The other problem with the `pure HBD' thesis is that it's fatalist. Development economists would like to believe (as would I) that e.g. Africa too can be rich, if only they can figure out the right set of policies. They would also like to believe that insights from development economics actually effect how well countries develop. Of course, what we want to be true does not need to actually be true, but it should not surprise anyone that development economists don't like a thesis which says, basically, `your whole field is useless, HBD predetermines everything.' (Or maybe, `your whole field is 99% useless, HBD plus not making obvious mistakes like communism predetermines everything').
Sure, but at least HBD is a fundamental, necessary-but-insufficient factor. Institutions are not even fundamental - they almost certainly depend on inherent human characteristics in the first place.
I'm saying that institutions are downstream of genetics/culture. Haiti are probably never going to have "good instiutions" regardless of who they elect. Same for 'human capital'. You cannot recreate the 'nordic model' in a country full of people very unlike nordic people.
Except that quick and drastic changes in institutions happen that obviously outpace genetics and culture - both China and India have rapidly changed their institutions to market institutions and benefited enormously from it. This doesn't mean genetics and culture aren't upstream of institutions - they probably aren't deterministic to any great degree
One of the CRUCIAL insights from HBD in terms of Africa is that the single most important thing that can be done for a brighter African future is to stop every African with half a brain from leaving Africa for (mainly) the west, because intelligence is a vital but strictly limited supply and one that Africa can't afford to export. But the political left, the people most concerned with African development, not to mention Africans themselves, by and large perversely *support* African brain drain, because they love the thought of Africans getting to have good lives in nice countries and think that the remaining african population can do anything the smart ones can if there's just enough 'investment' in 'education'. It's all very sad, really. And no realistic amount of remittances can ever make up for a lack of brain power.
Of course, if you REALLY wanted to turn up the dial of on African economic growth, you would be looking for ways of getting smarter Africans to not only stay in Africa but also to have more kids than the less smart ones. But that's obviously beyond the pale to even suggest.
"If the people who care about African development the most, as well as African themselves, disagree with your theory, then that’s pretty strong evidence that it’s flawed."
Do they disagree? "Brain drain" is a well known term, and as far as I know, it's uncontroversial.
Its undesirability is controversial. How many governments actually try to prevent it, eg by imposing emigration controls or an exit tax? By revealed preference most countries are not upset about so called brain drain.
The existence of the term is uncontroversial, sure. Not sure what that proves.
That doesn't necessarily prove that countries think it's fine; they might strongly dislike it, but think that they can't realistically stop it, and/or that admitting that they need to forcibly stop their brightest and best from leaving would humiliate them on the international stage (the Berlin Wall was a huge embarrassment for the Soviet Union, by way of comparison).
Does the other side of the argument hold? That if I wanted to enrich the West, my evil plan to impoverish Africans should be to import the smartest and most talented, because that would make my country smarter and their country weaker?
Let's say I wanted to put America First and improve America without any concern for other countries. Would I want to continue (or expand) our current immigration policy?
Or would I also support stopping Africans from migrating to America?
Impoverishing Africans does not automatically enrich the West. Since Africans are on average far less educated and far less successful than Americans, unless you're very selective about who gets here, the average immigrant will be successful by African standards but unsuccessful by American standards. That's before considering the many other reasons that drag immigrants down, like the language barrier, cultural differences, lack of recognition of foreign credentials, etc.
This kinda seems like "heads-I-win, tails-you-lose". Taking in Africans both hurts the African countries they're leaving, and the Western nations they're joining. So one might ask the question of why they want to leave, and why anyone would want them to come?
I'm also not sure it meshes with the actual data. 61% of Nigerian Americans have a bachelors, compared with 25% of other Americans. Nigerian Americans on average make more than the national average. So I can understand someone saying that those Africans would otherwise be raising the quality of life in Africa, but adding on the further claim that they are actually pulling down America makes the whole thing seem like it's just motivated reasoning.
That we're working backward from the conclusion that Africans ought not to be in America, and - surprise! - we discover that this is the only conclusion that you can reach from any political starting point, other than one of pure misanthropy.
<i>This kinda seems like "heads-I-win, tails-you-lose". Taking in Africans both hurts the African countries they're leaving, and the Western nations they're joining. So one might ask the question of why they want to leave, and why anyone would want them to come?</i>
They want to leave because, whilst mass migration isn't good for the countries they're leaving behind or the countries they're moving into, it is generally good for the individual migrants. And people want them to come out of a combination of racial guilt, sentimentality about people "following their dreams" and "trying to build a better life", a vague sense that everywhere outside the west is a complete nightmare so rejecting an immigration application is tantamount to a death sentence, and utopian ideological presumptions about how everyone's just a western liberal at heart so you can radically alter the demographics of a given country without also altering its politics and culture.
<i>I'm also not sure it meshes with the actual data. 61% of Nigerian Americans have a bachelors, compared with 25% of other Americans. Nigerian Americans on average make more than the national average. So I can understand someone saying that those Africans would otherwise be raising the quality of life in Africa, but adding on the further claim that they are actually pulling down America makes the whole thing seem like it's just motivated reasoning.</i>
"So one might ask the question of why they want to leave, and why anyone would want them to come?"
Why they want to leave is easy: their quality of life is vastly better in the West than in their home countries. Why anyone would want them to come is more complicated. Partly it's white guilt, partly it's sympathy for the plight of the world's poor, partly it's genuine appreciation of cultural diversity, partly big business likes them because unskilled immigrants can be paid lower wages and a diverse workforce with language and cultural barriers is harder to unionize.
"I'm also not sure it meshes with the actual data. 61% of Nigerian Americans have a bachelors, compared with 25% of other Americans. "
And that's because we are very selective about which Nigerian Americans get there. We're not very selective about which Mexicans get there, and consequently Mexicans form a racial underclass, causing a variety of social, economic, and political problems. If you want to welcome in more Nigerians in exchange for fewer Mexicans, I'm all for it.
Where has this HBD acronym popped up from? Suddenly everyone is discussing HBD, as if it should be obvious what it stands for!
I'm guessing D may stand for "Development", but a web search only turned up a company called Henry Boot Development, which doesn't sound very relevant.
It is short for Human Bio Diversity (as 'the hot taker general' said).
The important bit, however, is that the diversity making up HBD includes some items that are more than cosmetic: things such as intelligence.
If you believe that intelligence is (a) at least partly genetic, and (b) not evenly distributed between whites/Asians/black (as many/most HBD folks do) then one fundamental challenge for Africa is that Africans, on average, aren't as smart as, say, the folks whose ancestors lived in the Nordic countries.
And by enough to matter.
One implication is that countries full of (and run by) Africans *can't* be as competently run as northern European countries for the same reason that companies that don't have enough smart people will be run poorly compared to companies with many more smart people. Decisions will, on average, be worse.
Repeat as desired for *other* traits, possibly including the ability to construct high trust societies.
This is fatalistic because no one knows how to increase intelligence (education, yes, up to a point ... but not intelligence) so this implies that there isn't much to be done. "Africa wins again," as the saying goes.
"Human biodiversity". It's a code phrase used to talk about genetic determinants of e.g. intelligence without constantly being accused of racism. The term has been around a while, and has been popular among a subset of the SSC/ACX commentariat since before Scott moved his blog to Substack; I think you're just suffering from the Baader-Meinhof Effect.
I devised the term "human biodiversity" in 1998, then immediately discovered that anthropologist Jonathan Marks had published a book of that title in 1995. It covers ancestral differences, sex differences, and other differences that might be at least part biological, such as sexual orientation and handedness. It also includes the impact of chemicals on humans such as lead and steroids (1998 was a big year for the topic of steroids in baseball).
It's code for "race eugenics", and makes no sense for the simple reason that melanin means diddly as far as biological diversity goes.
Most genetic diversity is in Africa, so if population genetics were all that important then you'd expect the continent to contain both the richest and poorest countries on earth.
Good point, this is why I don't believe in genes for hair colour. If population genetics determined the amount of natural blondes and redheads in a population, you'd expect Africa to contain the countries with both the highest and lowest numbers.
This merits no serious response except to point you in the direction of polygenic traits. The unintended hair dye/IQ testing analogy is appreciated, however.
It is not fatalist, if you follow the obvious conclusion of these premises, i.e. eugenics. But given that even admitting that those premises just might be plausible already puts your Hitler quotient at like 90%, going the whole hog and claiming that the only real solution is to breed better Africans at scale is in a different city from where the Overton window is.
"the only real solution" Hmm... Are there other options from, e.g. the techniques of fault-tolerant computing and error-correcting codes? Add redundancy to the system and use it to try to reduce noise? Conceptually the simplest choice is to have three independent decision makers for each decision and take the majority result.
Ensuring decisionmaker independence is one of those hard problems that (HBD claims) is downstream from national genetic fortune, so seems to be a chicken and egg problem.
Anyways, I don't expect a viable political solution to be developed any time soon, regardless of what premises are actually correct. Progress in technology seems to be much faster than that in politics/philosophy/etc these days, so until that changes, the application of cutting edge tech is by far the dominant factor in determining the shape of the future. Things may end up going very well or very badly, but in most cases the current differences between the first and the third world would likely end up being completely irrelevant.
Agreed that decisionmaker independence is difficult. I don't know whether it is downstream from HBD or not, but "groupthink" has sunk many a decisionmaking group, even in many successfully industrialized nations, so independence is indeed a hard problem.
Re: "the application of cutting edge tech is by far the dominant factor in determining the shape of the future." Yes, this is my expectation as well. For good or for ill, I expect technological advances and their effects to be more important than anything else.
I find Mancur Olson's classic work 'The Rise and Decline of Nations' to be valuable here, even though he is focused upon economic rather than primarily social issues.
FWIW, I found the book quite convincing. Obviously it's long on narrative and short on proof, but how else could it possibly be? This is not a subject amenable to rigorous mathematical demonstrations.
I can't help but notice that many of the loudest and most passionate critics are coming at the book from a right-wing, and occasionally straightforwardly racist, point of view. You have to suspect that they're looking for reasons to find fault with a thesis that undermines their own worldview.
Then again, the thesis is flattering to my own politics so I might well be committing the same error in reverse. Not sure how to tell.
Part of the problem, in judging the book, is probably that there's too much agreement. Everyone knows that good political institutions with minimal corruption will help a nation succeed. So the Why Nations Fail thesis boils down to "this obviously-important factor is even more important than people give it credit for". It's pretty hard to test the difference between "moderately important factor" and "very important factor".
Political institutions are obviously significant, but then so is, say, geography. That, say, Belgium has more soil, climate, and more topography more conducive to human thriving than, say, Mali seems obvious. That Acemoglu and Robinson are reluctant to admit that even geography matters much is not confidence-inducing in their thesis, which tends in their presentation toward Popperian unfalsifiability.
And here we have a famous white supremacist, a man who has his own Wikipedia page about his racism.
I hope you understand why I'm suspicious of your motives.
Anyway, I'm sure they'd tell you about nations that succeeded with terrible geography or failed with great geography. And they'd have a a point.
But yes, their thesis is very difficult to falsify. Much like the rest of the field. This isn't physics, and you can't do controlled experiments with countries. You just have to get used to it; I promise that your own preferred explanations have the same problem.
Or is hating white people okay because they deserve it?
You're basically saying that "your position is wrong because it's bad" - you're not interested in good faith discussion, you want to show people down with slurs.
>Anyway, I'm sure they'd tell you about nations that succeeded with terrible geography or failed with great geography. And they'd have a a point.
Europeans and North-East Asians have managed to thrive on average regardless of geography.
While this may be accurate, I regretfully have no confidence in wikipedia on sensitive political topics
I also notice on climate change where the social cost of carbon was previously rated at a median $50 per tonne they now don't deign to refer to any number under $300 if I recall right
>I can't help but notice that many of the loudest and most passionate critics are coming at the book from a right-wing, and occasionally straightforwardly racist, point of view. You have to suspect that they're looking for reasons to find fault with a thesis that undermines their own worldview.
No, it's because his thesis doesn't work.
And stop using propaganda terms like "racist". If race differences exist, they exist and should be talked about. You calling them "racist" is just shouting down people who offend your ideological sensibilities.
The people you call "racists" have made better predictions over the past 50 years and empirical reality is more consistent with their worldview than it is yours. The "anti-racists" were convinced post-colonial Africa would blossom, the "racists" knew this is was silly. And when this prediction turned out to be dead wrong, we get a bunch of dataphobic just so stories to rationalize the failure.
>So the Why Nations Fail thesis boils down to "this obviously-important factor is even more important than people give it credit for". It's pretty hard to test the difference between "moderately important factor" and "very important factor".
No, the problem is that it treats institutions as a completely independent factor - they're not. They depend crucially on people. Haiti cannot "introduce" the Nordic Model, regardless of who they elect to power. If you want the "Nordic Model" you need people similar to Nordic people, because that's where this model comes from and why it works.
If you think that racist is merely a propaganda term, then you aren't worth talking to.
I'm not normally one to shy away from an argument. Normally I'd have a lot to say against the idea that racists have any kind of positive track record when it comes to predicting and understanding the world. But bluntly, it would be wasted on you.
I don't see what's undemocratic about Singapore. It's true that one party has continuously been in control since 1959, but one party has been in control of Chicago since 1931.
Alright, Chicago isn't the best example of a functioning democracy, but still...
possibly the bit where opposition politicians spontaneously but inevitably get sued into bankruptcy and/or jail, or where constituencies which vote the `wrong' way mysteriously but inevitably get penalized in the allocation of public resources.
If Chicago was its own country I'd suggest we wouldn't consider it a democracy either.
Focusing on political institutions inside a "failed nation" also conveniently ignores outside forces like say, colonialism (pre WW1) or neocolonialism (post WW2) or the British attempt to take over the Suez Canal or the various Arab Israeli wars subsequent to the fiat formation of Israel after World War 2, color revolutions, "freedom loving insurgents" that later become terrorist groups a la Syria, or the creation of the failed status of Libya thanks to outright Western warfare, etc etc.
You say "outside forces", but you only mention what the West did. How about the subjugation of eastern Europe by the Soviets, the communist terrorism sponsored by the USSR and China all around the world, the many invasions of non-communist countries by their communist neighbors (South Korea, South Vietnam), the Chinese invasion of Vietnam, or the Soviet invasion of Afghanistan?
And by the way, a French company built the Suez Canal. It was the Egyptians who took it over.
Eastern Europe was subjugated by the Soviets, correct, but it was because they were active participants in WW2 against the USSR under SS guise. Or perhaps you don't know that there were all manner of SS battalions from various Eastern European ethnicities?
Communist terrorism - not really sure what this is. Did Chinese or Russian Communists hijack airliners and fly them into buildings? LOL
Chinese invasion of Vietnam - huh. The two had a war - I'd like to see some evidence of an actual invasion.
Afghanistan: The Russians were invited in by the legitimate government of Afghanistan at the time. The mujahideen were the White Helmets of Reagan's era.
Ditto the Chinese in Korea - let's not forget who was the actual government before 1950 in North Korea. Korea was divided after Japanese eviction into 2 zones - which you do know, right?
The USSR and Communist China aren't saints by any means, but the notion that either sponsored terrorism is nonsense.
As for Suez: sure, the French built it but who owned the other half of the Suez company?
Oh right, the ruler of Egypt. And how did Egypt come to control the Suez canal?
Because the Brits, French etc objected to Nasser nationalizing it but the US said it was ok. LOL.
Poland was divvied up between Germany and the USSR in the opening stages of the conflict. The Poles say there weren't "Polish nationals" in the Waffen-SS, but there was a Galician regiment - and Galicia was part of Poland prior to WW2. It was only after WW2 that Poland was given the corridor linking it to the Baltic Sea as well as bits of Eastern Germany, and gave up Galicia (modern day Lvov and Ivano Frenkel) to Ukraine.
There were also Estonian, Latvian, Hungarian, Finnish, Romanian and Ukrainian Waffen SS "volunteer" units. But to be fair, there were also Belgian, Swedish and Norwegian Waffen SS outfits but I don't think any of them actually served in the Eastern Front: https://en.wikipedia.org/wiki/Waffen-SS_foreign_volunteers_and_conscripts
Yugoslavia: there were Serbian and Croatian Waffen SS.
Estonia, Latvia and Ukraine all celebrate their Waffen SS "freedom fighters" today.
Czechs, Slovaks - hard to say because Czechoslovakia was created out of thin air after the dissolution of the Austro-Hungarian empire. Did the people in what is the Czech Republic, Slovakia or Slovenia identify as Czech, Slovak or Slovene nationally back then? I have no idea and very possibly they didn't either.
Now take all of the above Eastern European nations (place on a map) that absolutely did have Waffen-SS "volunteers", mix in 27 million dead Soviets (not all Russians BTW), and I can't say I am terribly surprised that the USSR wanted to be sure that there would not be any more problems from Eastern Europe.
Especially since there was open warfare between Ukrainian freedom fighters and the USSR (and Poland) for several years after WW2 - which is now acknowledged as having been CIA funded.
I see. So because there were some traitors, you need to subjugate the whole nations, which were earlier victims of Nazizm, and actively fought against Nazizm. Yes, got the logic. Besides, 27 million soviets were in almost half Ukrainians and Belorussians and other nations (which is obvious if you look at the map). So no, none of this makes a good argument. And let us not forget what you yourself mentioned: Russia and Germany were allies before 1941. In fact it was Soviet Russia which provided Germany with resources to build their military might.
No, what I am saying is that it is understandable that a nation that just lost 27 million people to a war with Nazi Germany, which in turn was aided and abetted materially by significant numbers of Eastern European soldiers, would want a security zone over said Eastern European and German populations.
After all, it isn't like the West didn't occupy Germany as well, and Japan.
"Besides, 27 million soviets were in almost half Ukrainians and Belorussians and other nations (which is obvious if you look at the map). "
Other nations - you mean then or now? They weren't nations then. They weren't nations before then. They were all under the Russian tsars, which in turn were replaced by the Soviets.
As for half the losses being "non Russian" - that's the Western line. From the Russian perspective, being in Russia makes you Russian whether you are Buryat, Chechen, or whatever much as being in Russia prior to 1991 meant you were Russian whether you were Ukrainian, Belorussian or whatever.
"And let us not forget what you yourself mentioned: Russia and Germany were allies before 1941. In fact it was Soviet Russia which provided Germany with resources to build their military might."
Germany had lots of friends before 1941. They included the United States and Britain. Russia sold stuff to Germany - and bought stuff from Germany just as Germany bought and sold stuff with the US, UK, France etc. Not the least bit clear what your supposedly point is.
In fact, the single largest installation of IBM's new card based computing systems was ... Germany. It is very arguably likely that the reason the Mustached One was so easily able to ferret out the otherwise fairly well intermixed Jews in the German population was use of this compute capability. It was also predominantly US capital which financed the industrial renaissance from which the Mustached One benefited mightily vs the Russian energy which you reference.
But if we're going to talk history - Poland signed non-aggression pacts with both the USSR and Germany; the German one being signed by the Mustached One who came into office in 1934. Oops.
I'm from Estonia; our understanding of the Estonian men voluntarily joining SS was that Soviet threat was felt to be the worst of all, and joining the SS was at the time the only available option to avoid it. The men joining the SS didn't care at all about the German agenda, only about their own (which is kind of selfish, yet the situation was really awful). The plan was to drive out the Soviets, then hope the Germans get crushed by someone else leaving us as an independent country. Anyway, I don't think we should be proud of "our own SS-division".
Of course, the Soviets would have swallowed these countries anyway, had they fought back or not. The plan was already there before any fight.
What you are saying may well be true for some. It does seem unlikely that none of the Estonia Waffen SS group were pro-Nazi as opposed to anti-Soviet just because there is wide variation in beliefs among any large population of people.
But ultimately, if Estonians fought and killed Soviet soldiers - that's what matters. There is no way to tell the sheep from the wolves especially once blood was spilled. And even if the plan you outlined above was envisioned - there are consequences to failing in plans.
To be clear: Russia made the right decision in letting the Eastern European/Baltic countries go their own way. The cost to Russia was ruinous and the benefit - security or otherwise - clearly negative.
>Now take all of the above Eastern European nations (place on a map) that absolutely did have Waffen-SS "volunteers", mix in 27 million dead Soviets (not all Russians BTW), and I can't say I am terribly surprised that the USSR wanted to be sure that there would not be any more problems from Eastern Europe.
Okay, why doesn't this cut both ways? Why aren't you sympathetic to the eastern european victims of soviet oppression that surely motivated many of them in the first place?
The Soviets won the war. The eastern europeans mostly did not support the Nazis, but it is pretty hard to tell the sheep from the wolves. And it isn't like the USSR didn't spend enormous amounts of treasure building up those nations after WW2 despite the economic warfare from the West.
The reason the USSR collapsed is precisely because of the massive ongoing subsidies to support those Eastern European nations - so it wasn't a plunder and loot situation.
So what should I be sympathetic to? That they weren't "Free and democratic" but were educated, fed, infrastructure built up and secure at the literal expense of a devastated Russia?
I have no issues with these nations getting their "freedom". The problem is that the result for the majority of them has been highly negative. Populations literally declining, GDP growth not impressive if not outright sad, etc etc.
Yes, these people mostly didn't die but fled to the West - but the consequence is a hollowing out of all of these nations as young people left for the EU and so forth and the old and poor are left behind.
Poland, for example, went from a ship building, industrial nation to what do they actually do now? They don't build ships - Lech Walesa's Gdansk shipyard exists still but employs a tiny fraction of workers vs. what it used to. Poland is literally buying tanks and AFVs/IFVs from South Korea LOL. Poland's population didn't fall but it is literally identical to what it was in 1991 - 30+ years of zero population growth.
East Germany, in turn, has not prospered in the least since it reunited with West Germany. There are enormous disparities between East and West even despite the trillion or so euros spent to fix the situation.
Romania, Hungary - both Estonia scale population declines. I am not going to look at every single Eastern European country but the trend is pretty damn clear.
If you mean that the Baltics were independent for a year or 2 after they rebelled against their pre-existing Russian Tsarist government in 1917, then were retaken by the Bolsheviks as being "annexation", that's your interpretation.
How many years of Baltic independence was there from say, 1800 to 1991?
2? 5?
I fully grant you that the Baltics are a separate ethnicity with different languages, and even that there have been Baltic nations such as the Polish Lithuanian empire, but the notion that Russian then Soviet dominance over them is improper is silly given the Polish Lithuanian empire's dominance over Russians before that.
Parts of Eastern Europe were independent after WW1 because they were the bits of the Austro Hungarian empire. But other parts were part of Russia - and a number of them including the Baltics were literally part of Russia except for short periods of rebellions that were crushed by the Bolsheviks.
As for 1800-1991 - I chose those that's when the Russian empire absorbed them. As I also clearly noted - there were earlier periods where Russia was under Polish-Lithuanian thumbs.
If you want to look at 100 to 1000 AD - none of these regions bore the slightest resemblence to what they are today. Among the more prominent examples: the Baltic Crusades occurred in the 1100s and later - Swedes to Finns to Germans to Danes conquering these regions under the banner of Christianity.
The point is that any single European ethnic viewpoint is never going to be trustworthy because the entire setup is a ball of worms - and this includes Russian viewpoints. And like all balls of worms - you can find any justification for any possible position you want but ultimately, it devolves to who can make theirs stick.
I think the subjugation part refers to Hungary 1956, Czechoslovakia 1968, etc., not the WW2 aftermath. (Which, required little subjugation, as the Nazis and their allies were hated and discredited, and the people tired of war.)
(Also, Nazis essentially set out to ethnically cleanse the entire Poland, and the entire occupation period was one of constant civil war. If you look for Nazi collaboration there, you may as well look for it among the Jews, it's pretty much the same level of systemic impossibility and absurdity.)
Hungary 1956 and Czechoslovakia 1968 are definitely examples of subjugation, but I was also talking about the WW2 aftermath. Eastern Europe didn't spontaneously choose communist governments in free and fair elections. Here's what Stalin did in Poland to ensure he could colonize it: https://en.wikipedia.org/wiki/Warsaw_Uprising
"While approaching the eastern suburbs of the city, the Red Army halted combat operations, enabling the Germans to regroup and defeat the Polish resistance and to destroy the city in retaliation. [...] Recent scholarship since the fall of the Soviet Union, combined with eye witness accounts have called into question motives of Russia and suggest their lack of support for the Warsaw Uprising represented Soviet ambitions in Eastern Europe. The Red Army did not reinforce resistance fighters or provide air support. Recently declassified documents show Joseph Stalin tactically halted his forces to let the operation fail and allow the Polish resistance to be crushed.[19]"
>Eastern Europe didn't spontaneously choose communist governments in free and fair elections.
Obviously, but it didn't actively reject them either. (And when it did, the Soviets initially stepped aside - in Austria, Yugoslavia, Poland. Until Hungary.)
Your argument seems to be that USSR acted strategically and did not implement liberal democracy in the territories it controlled. Which, true, but essentially meaningless, and does not qualify as "subjugation" under any meaningful sense of the term.)
Agreed, those were subjugation. How much of those rebellions were organic vs. CIA fueled? Did the Hungarian and/or Czechoslovakian populations rise up en masse to fight the Soviet occupiers?
According to Wiki: 2500 Hungarians and 700 Soviet soldiers died in the 1956 repression. Sure doesn't look like a popular uprising to me.
And wiki says 137 Czechs and Slovaks were killed in 1968. Hell that's not even a good quarter in Chicago.
From the numbers: it seems pretty clear that these were not widespread popular rebellions. Or are you accusing the Soviets of being soft for killing only 2500 and 137, respectively?
The Czech Spring was relatively bloodless because the government knew that armed resistance was futile and ordered its citizens not to fight. I don't think this tells us anything about how popular or not the reformist government was.
Hungary and Czechoslovakia were popular movements, and you can tell they were popular movements because they did not require force to institute, but did require force to crush.
Compare these numbers with some genuine CIA operation, say 2019 Bolivia (no proof of CIA involvement, I guess, but it fits the type). Most deaths were among the protesters against the coup, but more importantly, there were a total 33 of them. And this is normal, preferring X to Y does not preclude preferring Y to death, your standard for [how much people must be willing to fight an overwhelming violent force until you accept them as genuine] is just outright insane.
2500 and 137 dead doesn't look like much of a popular uprising to me give the literal ~10 million population each.
The American War of Independence saw 20K to 70K killed out of a far smaller population (~2.5 million).
French resistance lost 24K.
Soviet partisan losses were certainly in the 6 digits and maybe 7.
Greek resistance lost 20K.
The list goes on and on. Can't say the above numbers look much like a popular uprising as opposed to a small group, unless you want to stipulate the Soviets had a light hand in suppressing said rebellions. Hungary is closer given the relative population size of Hungary vs. France, but Czechoslovakia definitely does not.
2019 Bolivia wasn't either an outside intervention nor was there mass movement of the military. The deaths were police shooting into crowds for the most part. Not the least bit clear how you can equate that with your own self-professed Soviet crushing of Hungary and Czechoslovakia with tens/hundreds of thousands of soldiers and tanks. Bolivia also wasn't against a foreign power - it was against their own government.
My standard is pretty simple: if the foreign occupier is so odious that they rebelled including force of arms, that is proof of conviction.
A bunch of NED sponsored sign wavers, in contrast, is not proof, nor is an extremist group conducting a military uprising, proof. Shay's rebellion, for example, clearly was not a widespread popular affair.
Nor is your (apparent) assertion that desire is sufficient to characterize a popular uprising. There are very specific legal definitions for rebellion, mutiny, treason and so forth - for a very good reason. For example, the Wiki definitions of rebellion vs. insurrection vs insurgency: "An armed but limited rebellion is an insurrection, and if the established government does not recognize the rebels as belligerents then they are insurgents and the revolt is an insurgency."
Poor review (and comments!). Seems to set out disagreeing with the authors theories and, from there, conclude the book is bad. If you disagree with a thesis and expect scientific evidence in a book intended for a popular audience- of course the book is bad and academic papers are better - but that's not the point of a book like this!
Also doesn't reflect well on ACX or this commenting audience that a similar book, WEIRD, is getting glowing reviews even though it's extremely similar in style just containing different conclusions.
That aside, for those here looking for other great books like Why Nations Fail or WEIRD that making sweeping historical arguments and summarize vast amounts of research without provide bullet-proof data/evidence... worth checking out Escape From Rome. I found it to offer an interpretation of history that transcended and included both WEIRD, GGS, and Why Nations Fail.
Never read weird, but this book was dumb. It’s a fine book if you asked me to have some random smart person write a book about the topic. It is a piece of garbage as “the leading book on economic development by experts on the field”.
+1 Reading this review was weird, because it seemed like the author had a vendetta against the book and yet was doing a poor job of making it actually sound bad.
And even if they were right, that just leads to the "conclusion: review not worth the candle" issue as they put it. Most people here are never going to read any of the books "reviewed". The point of the contest is to produce interesting essays, not a shopping guide. If you think a book is bad, you shouldn't write about it in the first place, or else use it a springboard to write something better like Scott often does.
On the bright side, one problem with this year's contest is that so many of the reviews have been strong contenders for the top spot, so it's refreshing to have a really terrible review for contrast every once in a while.
The other issue is that AR are not very original. Most of these points were made by Douglass North and coauthors. The question that remains is why is Acemoglu so revered by academic economists. It seems his fame is based on his incredible ability to produce top-5 publications based on shady data or dubious IV strategies.
I agree with the author of the review that the academic papers are much better, but the book is not all that bad if regarded as popular science. The main problem with the book is that "institutions" is an umbrella term for a lot of different stuff, plus that monocausal explanations for something as complex and vague as "desirable development" is likely to seduce you rather than enlighten you (a problem it shares with the WEIRD book).
To break the growth code and avoid the middle-income trap, a country needs three things:
1. Some system to generate a surplus that can be invested
2.Some system that ensures this surplus is not mainly invested in idiotic things
3. Some system that ensures that those who invest in non-idiotic things, can be reasonably confident they will be allowed to benefit from their investments.
...these three things can be achieved/created in several ways, and there are also several ways they can break down. The ways that work is to a varying degree context-dependent, so ways/strategies that worked in one country do not necessarily work somewhere else. The context may also change across time. Also, "system" in this context is a historically derived amalgam of institutions, culture, traditions and ways-of-doing-things that to an unspecifiable-in-advance degree can be influenced by political decision making.
Coincidences and good luck/bad luck also play unspecified, but probably significant, parts. The vikings, which is a historical/cultural export from my part of the world, were deeply impressed by - and likely to follow - a chief that had shown "he was favored by luck", even if he was otherwise not very impressive. Probably because according to Norse mythology, being in luck could be a sign you were favored by the Norns (Nornir), the female supernatural beings that spin the threads of fate not only of humans but also of Gods (Aesir) - thus arguably being more powerful than Gods. Perhaps countries, like Gods and humans, are favored to a different degree by the Norns, spinning the threads of fate on their forever-spinning wheels.
The last paragraph was a digression, but is not that what a comment section is for...
Good Review! To the author: have you read "The Birth of Plenty"? It's currently my favorite 'big idea' macroeconomic history book. Curious what you think about it.
"Each society functions with a set of economic and political rules created and enforced by the state and the citizens collectively. Economic institutions shape economic incentives: the incentives to become educated, to save and invest, to innovate and adopt new technologies, and so on. It is the political process that determines what economic institutions people live under, and it is the political institutions that determine how this process works."
I don't see how that's a definition either. It states what economic institutions do and that they are determined by the political process which are determined by the political institutions. It does not state what institutions are at all!
"To be inclusive, economic institutions must feature secure private property, an unbiased system of law, and a provision of public services that provides a level playing field in which people can exchange and contract; it also must permit the entry of new businesses and allow people to choose their careers. ... such rights must exist for the majority of people in society."
As a couple of other comments have pointed out, Douglass North got there first. In his Nobel lecture, he wrote "if the institutional framework rewards piracy then piratical organizations will come into existence; and if the institutional framework rewards productive activities then organizations – firms – will come into existence to engage in productive activities."
I will have more to say about North on my own Substack soon.
> "To be inclusive, economic institutions must feature secure private property, an unbiased system of law, and a provision of public services that provides a level playing field in which people can exchange and contract; it also must permit the entry of new businesses and allow people to choose their careers. ... such rights must exist for the majority of people in society."
Interesting. I've been reading Amy Chua's World on Fire recently; the message of that book is that institutions matching this description are evil and result in small insular groups controlling 90%+ of the economy.
why do A&R insist that institutions are the ur-cause of economic growth? why not "culture geography institutions policy all play a role to varying degrees, with institutions playing a slightly higher role"?
my answer:
i think their framing is a product of the context in which the book was written. during a period when institutions and politics were given very little attention, and development was thought of as a top-down policy project to be implemented by global institutions like the world bank, UN, and IMF. this paternalistic technocratic view which placed very little weight on the internal politics of developing countries themselves was the consensus in the 90s and early 2000s, and to the extent to which it is no longer a consensus is in part due to the immense success of A&R in changing the narrative. i'm almost certain i heard or read acemoglu say this in a podcast or interview, but can't find it now.
I liked that review; I hardly ever read the books reviewed, now I can do so without self-guilt. :D Fine puns and fine links to explore further - oh and about institutions/politics: sure, they must be important, as bad ones can and will screw up badly. But ok-ones do not cause development by default, can't push with a rope. Infrastructure and literacy are fine aims, high taxes and red tape: less so. People's lives in Haiti may be improved fastest by leaving. Only: We won't let them in.
I think you can just strip away all the talk about institutions. The core message, that a powerful minority abuse their power and curtail development because things like the rule of law are against their interests, holds up pretty well imo.
Most of the successful growth stories (South Korea, Singapore) feature authoritative admins who wanted growth and weren't only interested in material wealth and power for themselves. Maybe China is like this too?
Talk about institutions is just a distraction from this core message and doesn't add much imo.
I think you can just strip away all the talk about institutions. The core message, that a powerful minority abuse their power and curtail development because things like the rule of law are against their interests, holds up pretty well imo.
Most of the successful growth stories (South Korea, Singapore) feature authoritative admins who wanted growth and weren't only interested in material wealth and power for themselves. Maybe China is like this too?
Talk about institutions is just a distraction from this core message and doesn't add much imo.
In looking at N dimensional problems, using N-X variables can't work. Think Conic Section or real Flat Land by Abbot.
In looking at population density one variable is the control of enteric diseases (food and water born diseases). The great invention of the toilet and disposal system allowed high population densities in the West, but we lost the nitrogen fertilizer and if we didn't create synthetic fertilizer (ammonia) we would have failed. The East (China, etc.) developed the wok for stir frying, blanching, boiling, or otherwise killing the pathogens on the food from using night soil for fertilizer.
The sanitary engineers have saved more lives that all the doctors in the world, but we can't even see our own culture.
AJR intentionally stymied the career of David Albouy for the accurate criticisms he made of AJR. In https://www.aeaweb.org/articles?id=10.1257/aer.102.6.3059 Albouy he correctly showed that AJR had cherry-picked or fabricated a significant portion of their data, but Acemoglu had already built an entire reputation on that work so pressured colleagues to hamper Albouy's advancement.
An admittedly beyond the pale joke that made the rounds in development economy-circles many years ago may none the less be, well, a bit entertaining to re-tell in this forum:
An Asian and an African student both attend the London School of Economics, and become friends. Some years later, the African fellow gets an email from his friend: "Hey, I've become Minister of Transportation in my country. Want to come for a visit?" He does, and at the airport is met by a man diving him cost-free to his friend's house, which turns out to be a large villa in a posh suburb. His host shows him around in all the nice rooms, and he says: "Wow, how could you afford all of this on your salary?" The Asian fellow smiles and takes him to a window at the back of the house. "Tell me what you see". The African fellow says: I see hills, and further away there appears to be a large motorway". The Asian fellow looks at him, smiles and says: "Ten percent". The African fellow leaves, very thoughtful.
Some years later, the Asian fellow gets an email from his friend: "Hey, it was so nice to visit you. Now, I have also become Minister of Transportation. Please come visit me back". The Asian fellow does. At the airport, a big limousine with a private chauffeur meets him, and drives him to a small castle in a large park. The African fellow guides him through room after room filled with paintings of old masters and gilded furniture. "How could you afford all this?" The Asian fellow, astonished, asks. The African fellow smiles, takes him to a window overlooking the large backyard, and asks him what he sees. The Asian fellows stares and says: "Sorry, but I do not see anything except rolling hills and forests". The African fellow looks at him, smiles, and says: "A hundred percent".
Caveat: Asia and Africa are very big places, with lots of different countries in them, and things have changed a lot in most African countries since this joke went the rounds. But it may more generally illustrate that there are differences between corruption which none the less creates development, and totally malign corruption.
I think there is a game theoretic aspect to how any large group functions: neighborhood, society, tribe, nation, supranational group.... This defies any attempt at finding a solution to a question as broad and sweeping as "why do national fail"? Looking at it from that perspective, AR's assertion that "institutions" are what matter hit the mark (which is rather broad) as accurately (and probably more) as any other silver bullet theory, including those based on culture or geography or genetics. Of course, this begs the question of how good (i.e., inclusive) institutions emerge in the first place. It could be because of "culture" (whatever that means). Or, heck, good institutions good beget good institutions until one's geographical luck runs out (e.g., prolonged droughts start to appear).
This review treats WNF as a punching bag, which is fair, but the review itself sheds no more light on the question being asked than AR do.
<i>This review treats WNF as a punching bag, which is fair, but the review itself sheds no more light on the question being asked than AR do.</i>
I don't think that's a reasonable criticism. A bad attempt at explaining something doesn't become good just because the reviewer can't currently think of a better one.
Yeah, that's fair. I shouldn't have concluded with that particular phrasing.
Overall, I am more sanguine about the theories expounded in WNF than the reviewer is. I think AR are right in their identification of institutions as the key determining factor in the fortunes of nations. What's missing from their analysis is how those institutions emerge in the first place, as "institutions" are either man-made or evolve from complex human interactions, and so by definition cannot be the root causes.
As I mentioned earlier, I believe the emergence of institutions of particular types almost defies analysis as there is a game-theoretic dynamic underlying the process. Game theory, beyond the most simple formulations (like 2-person games or zero-sum games), has proven to be basically unsolvable. But this is not the criticism the reviewer levels at WNF. He/she seems to be looking for an alternative silver bullet explanation, as he/she finds "institutions" to be unsatisfactory, and criticizes AR on those grounds. I think that's both unfair and wrong on an empirical level.
Reading this review was weird, because it seemed like the author had a vendetta against the book and yet was doing a poor job of making it actually sound bad.
And even if they were right, that just leads to the "conclusion: review not worth the candle" issue as they put it. Most people here are never going to read any of the books "reviewed". The point of the contest is to produce interesting essays, not a shopping guide. If you think a book is bad, you shouldn't write about it in the first place, or else use it a springboard to write something better like Scott often does.
On the bright side, one problem with this year's contest is that so many of the reviews have been strong contenders for the top spot, so it's refreshing to have a really terrible review for contrast every once in a while.
Why is this an unoptimistic take? Is it that hard to limit how extractive elites are in a country?
It's mentioned a full-on invasion would be required to do so, but can't less dramatic intervention do it if you explicitly target solving expropriation risk for a country you're intervening in?
Political rulers don't say to themselves, "I'll keep my country poor so that I can be wealthy".
Rather, they say, "My nephew broke a contract with another company, and they're suing? I'll just tell the judge to dismiss the case." "Mary is the best person to be in charge of roading but she is not related to me. I'll appoint my good-for-nothing son." "Newspapers are saying bad things about my rule. I'll shut them down." "A sewer system or a safe water supply is not a fitting monument for me. I'll start an airline instead. The banks will lend for it; I'll see to that all right."
It's not high-level, abstract deliberateness. It's a thousand little decisions that undermine and destroy institutions like the rule of law, transparent government, meritocratic bureaucracy, and evidence-based investment.
Okay, and why do they make these decisions but whites and (many) east asians don't?
White people (and Asians) absolutely do. The reasons that some mostly-white countries have managed to do it less are, well, what the book's about.
There are plenty of whites in Eastern and Southern Europe that are still doing this, and every country can find examples if they look back in their history. Heck, I think many are currently accusing either Biden or Trump from engaging in these specific problems, look at the situations with their children and for a start. Meanwhile, Obama was accused of many things, but cronyism wasn't one I remember, and at least not to the extent of the last administrations.
To be fair, though, both Obama's children were still minors when he left office, which would limit options for cronyism.
Check out Russia, or Ukraine. You're going to tell me these societies are not corrupt?
I have no evidence, but my gut feeling is that countries in which there are long-standing traditions of "speaking truth to power", being able to criticise policy decisions without fear of losing your life (and without the ruler fearing for his life or his rule because of the criticism), and of mass public protest, get things that improve the lives of ordinary people.
Hofstede's cultural dimensions theory attracts me, especially the notion of "power distance": the degree to which people want to have a say in decisions that affect them. Low power distance means being close to decisions; high power distance means doing what those in charge decide for you. The Anglo countries, the Nordics, and northwestern Europe generally, score relatively low for power distance; the Philippines and other similar countries score high. Eastern and southern Europe are middling high.
Power distance is pervasive: it affects interactions with minor authority figures like parents, doctors and your supervisor as well as those in government. Low power distance leads to demands for explanations, which those in charge feel compelled to provide...eventually. Thus transparent government at all levels, and eventually rules-based government at all levels, from the family up, and rules-based peaceful resolution of internal conflicts, which is what I think most people mean when they say "democracy" - orderly, peaceful regime change that is accepted gracefully by the losers, and without reprisal against them by the winners.
Beware single-factor explanations, though. And especially beware things which you want to believe.
This explanation seems to dovetail nicely with WEIRD from Henrich.
"A sewer system or a safe water supply is not a fitting monument for me. I'll start an airline instead."
The first two need constant, unsexy maintenance or they kill people. The second can stagger along on government subsidies for decades (see Air Canada).
It's hard to avoid politicians spending on highly visible stuff at the expense of utterly necessary but invisible (when it's done) maintenance in the First World. In the Third World? Good luck.
Unmaintained planes kill lots of people too. Aeroflot used to be notorious for this. I don't think that maintenance ever crosses the minds of this kind of ruler.
I think you're mixing two definitions of "elites". Taxi-driving immigrants might have been in the top income and/or wealth decile, but they were never elite in the sense it's being used in the review - i.e. political decision makers like dictators, magnates, cabinet members, generals, etc.
I forget the name now, but a former Pakistani general did emigrate to the US and his daughter became a PBS journalist. I looked this up a few months ago when I recognised the surname of this woman (I studied South Asia a lot). So even the very top elites do in fact emigrate because they make the calculation that their offspring will probably be better off in the long run (and that's probably rational in many cases).
There's three breakpoints that make it much more likely an elite leaves their power base.
-Strong/growing potential of being killed or ruined by those in charge
-Strong/growing potential of being overthrown by a different group
-Maximizing the potential extraction from the poor country you are in (that is, you have lots of money but poor institutions in your country mean you live at a low qualify of life unless you move)
In each case, while it made sense to stay as a powerful elite for a while, there was a point where it made more sense to leave.
Oh, lord. If your theories of economic growth don't even try to explain Imperial Germany, Imperial Japan, Cold War South Korea, or Cold War Taiwan, what the hell good are they?
They flatter peoples feelies.
IDK about early Korea or Taiwan, but Germany and Japan didn't work out so well. I think nations probably fail for lots of reasons, not just one or the other. Listening to Lex Fridman talk with Magatte Wade, I'm totally down with bad institutions being one of many pitfalls.
(I didn't like this book review.)
Both countries grew quite well economically after the war, and the conclusion one can draw is that the destruction of physical capital didn't matter that much because each still contained so many people who'd been economically productive beforehand.
Hmm the OP used imperial Germany and Japan, which I take to mean before WWII. Germany after the war is a pretty good example of why institutions matter.
Imperial Japan would be during WW2 as well. And it would be quite odd to consider Imperial Japan to be a "failure". Pseudoerasmus discusses how they got ahead of other places industrially here https://pseudoerasmus.com/2017/10/02/ijd/ Japan's military victories over Europeans were major inspirations for anticolonial movements, and I think their successes on that front are evidence against them being a "failed state" in the way that so many post-colonial countries wound up being. The very high frequency with which post-colonial regimes wound up being "extractive" failed states in Acemoglu's terms should raise questions about what the actual cause of that is. This paper citing Acemoglu https://academic.oup.com/isq/article/63/2/406/5377578?login=false has that finding, but because they explicitly aren't making any comparison of non-colonized countries (like Ethiopia & Thailand), they also fail to question whether colonialism was the actual cause of these countries' outcomes.
Huh, I guess I figure they failed because they started a war with us and then lost. But sure, while they lasted they were awesome.
Post-war US economic aid confounds our ability to easily assess it, but both Germany and Japan grew significantly after the war as well. I don't know the trajectories they were on before or after, but by the 1950s at least, both were doing well and rapidly improving, despite having most of the industrial base destroyed in the war.
Sure, the Nazis/Emperor were no longer in charge, but for AR's theories that really shouldn't matter either.
The argument isn't that it can't happen, but that it can't be sustained long-term outside a democracy, because the authoritarians in power are always ready to ditch growth in order to maintain control.
China is actually a perfect example - it had a good run, but now the autocrats have cracked down, and China will peak fairly soon, never having overcome the U.S..
While Taiwan and South Korea switched over to democracy in time to keep growth politically sustainable long-term.
The kind of rapid growth China experienced is generally only possible during periods of "catch up" development, where a lagging country sprints towards the global technological frontier. Once at the frontier (which China more or less is now), growth slows to the (low) level of other countries at the frontier.
The slowing was inevitable and entirely unavoidable regardless of policy.
Parts of Shanghai look better than NYC or any other major global city, then just outside of Beijing's last ring road it looks like Afghanistan, so I get confused trying to assess its current state of development.
Similarly a lot of the growth has come from urbanization, which might be cresting, but if you just count the working age population who haven't migrated to the coasts yet you're looking at numbers larger than most other countries' entire populations. Actually the number of Chinese citizens who will migrate to urban areas this year will undoubtedly be larger than the median country's entire population.
I don't much know what to make of this all, just that China is weird and hard to predict. I lean with you that this probably peaks soon, but if I'm wrong it's going to be because I couldn't wrap my head around the scale of the place.
Actually, many of China's largest cities, including Beijing and Shanghai, are shrinking. Just a few examples:
https://www.scmp.com/news/china/article/3223647/chinas-falling-birth-rate-may-have-more-disastrous-effect-declining-numbers-major-cities &
https://journals.sagepub.com/doi/abs/10.1177/0308518X221076499
Thanks for those links!
My main point might have gotten lost above, that data about PRC population trends can be misleading. These underscore that point.
Meng and Long note that cities in China are shrinking "in the context of rapid urbanization."
That might be confusing at first glance, what does it mean for cities to shrink during urbanization (prior to 2020)? If you look at the broader work of their Shrinking Cities Research Collective, it's clear they really see economic migration as the major driver here, they would agree with me that people are flooding into Beijing. When they talk about declining populations in the northeast they're not talking about Beijing, but about cities in Heilongjiang, like for example the Yichun case study:
https://www.beijingcitylab.com/projects-1/15-shrinking-cities/
My main point was that there are unique complexities to data in China that make it hard to concretely follow trends. One specific such oddity is the hukou system, which undermines official locality population statistics. Many of the people who live and work on the coasts aren't technically residents there, which just messes with all the numbers.
So for example, the stats that informed SCMP made the rounds in multiple press outlets. Those numbers fully excluded migrants, who make up over a third of the population in Beijing. Reuters updated its coverage with a caveat after a demographer weighed in: https://www.reuters.com/world/china/china-capital-beijing-experiences-first-population-decline-since-2003-2023-03-21/
Meng and Long's research has pointed out another way stats in the PRC are confusing, which is that politicians frequently shift the boundaries of administrative districts, sometimes to intentionally alter local population statistics to make themselves look progrowth, sometimes to limit their responsibility for struggling areas, it's a very noisy effect.
Of course, we could easily have increasing urbanization simultaneously with declining urban populations, contradictory as those might seem at first glance. In fact, we are very likely to see that in the coming years as national population decline accelerates and as urban migration continues. I suspect we're still 2-5 years out from that, but, only like 60/40 on that, I could easily be wrong. Maybe zero covid was shock therapy for the economic migration patterns and this has flipped already. There were some dramatic images of economic migrants returning to rural areas on foot last year to avoid quarantines. Frustratingly I cannot find up to the month numbers on Beijing's population that include migrant data that I trust to even gesture at the true picture.
All that said, I appreciate the references, but they bolster rather than detract from my main point above, which was that stats and realities in the PRC are confusing, so drawing strong conclusions from statistics and trendlines there is risky. I lean that China is cresting too, like GP, I'm just urging caution here.
I mean, sure, it's a hypothesis. The problem is, there's no obvious evidence to distinguish the hypotheses "pluralistic institutions are essential to sustained growth" and "The United States was simply in a position to impose its favored political arrangements on Japan and (West) Germany after WWII, and to demand the adoption of the same from South Korea and Taiwan at the end of the Cold War as an implicit condition of continuing to defend them from dangerous neighbors".
The current trouble in China might be evidence for it, sure, but then you'd either have to count Japan's growth collapse since the early 1990s as counter-evidence, or treat Japan as having "extractive" institutions even after WWII. One obvious counter-argument would simply be that the sort of export-oriented industrialization that was behind the Japanese and Chinese "miracles" has inherent limits (for example, in how much the rest of the world can import, based on the size of the world economy). and China hit those limits earlier because it's an order of magnitude larger in population.
I don’t think the idea is that institutions are a panacea - if you’re undergoing demographic collapse (or in another case, get your country raped by Russia) that’s going to hurt the economy no matter what.
While if you average Japan from 1945 to now, that’s still going to look pretty great.
The trouble there is, if someone's going to throw out the Japanese Lost Decade(s) as data point against the importance of pluralistic institutions on "demographic collapse" grounds, they have to explain why they won't let the other side throw out the recent Chinese slowdown as evidence for the importance of those same institutions on the same demographic basis.
Fundamentally, the problem of this book's thesis of "development requires democracy" (as also exists with the once-fashionable argument that "development causes democracy") is that each of the three great struggles of the 20th Century (the First World War, the Second World War, and the Cold War) ended in a US victory. Thus any evidence for a link between development and democracy might simply be "as a country developed, it either conformed to the expectations of the United States, or was crushed as a threat to the United States."
Well, the US is probably the number one data point in their theory, and they likely see the US's victory (largely due to overwhelming economic advantage) as the ultimate result of the democratization of the US's politics.
Of course, if they're wrong then the US just confounds everything and there's a lot less to see.
Acemoglu's issue is that if he follows his thesis to its conclusion it leads to right wing politics in a way the left wing Acemoglu doesn't want. (This is not speculating on his political allegiances: he's called himself a social democrat.) If you really believe that extractive elites are the issue and then define extraction and elites in a principled way you cannot escape that a lot of his favored policies fall under his definition of extraction. You can see this in Brazil, for example, where his left wing politics blinded him to the ways the Brazilian state was extracting and then not using such extracted resources wisely.
Of course, I find this rather easy to resolve: I do think extraction is bad but it's possible the good done with the money overwhelms the bad. In short we should be suspicious of extraction but sometimes the good it supports really is sufficient to justify it. But in that case he would have to admit that his central thesis (elite extraction bad!) is wrong. He would have to rework everything to be about how extraction occurs (and how much damage it causes) vs what determines what the resources created by extraction are spent on (and how effective that is). Which would be a more interesting and better book in my opinion but wouldn't be Acemoglu.
Yes, the immediate question which popped into my mind was, "what if there were an institution that tried to be inclusive of some people by being extractive from other people?"
That question summarizes the entire project of first world left wing politics. Extract from powerful and dominant groups (at least in their opinion) and use that to create a more inclusive society by transferring the extracted resources to weaker or less dominant groups (at least in their opinion). That this fact escaped Acemoglu is still baffling to me. I think he's quietly drawing the definition of extraction so that it just doesn't include things he likes. But that's a rather damning criticism, isn't it?
Yes. This is reminding me of the book review about medieval Catholic marriage rules. It's fine to embrace the controversial topic or reject it, arguing for it or against it. Even putting up a pro forma cookie-cutter BS argument against it is useful as a signal. But completely ignoring the controversial topic feels like scientific malpractice.
Seems off-topic, but I've been trying to understand what you are referring to, and I'm stumped. Are you talking about Henrich's book ("marriage rules")? What controversial topic did it ignore?
It talked about a millennium-long program to exert control over human mating, and didn't address the question of whether 30ish generations of this had a genetic-level effect on the group of humans it was done to. Generally speaking, even considering the hypothesis can get you called a racist, and I'm only discussing it here because I'm pseudonymous.
Off the top of my head, there seem to be some good reasons that the policy wouldn't have a strong effect. The policy might have been poorly enforced (although that undermines the main thesis). There wasn't any positive direction, just removal of some options, so there's no a priori reason to assume that any sort of evolution would occur. (Or is there? What criterion filled the gap left by kinship?) It's entirely possible that humans have a baked-in instinct to treat kin well, but when that isn't given a strong clan to focus on, it fades away. (Alternatively, the instinct might re-focus onto constructed groups such as religions, states, ideologies, corporations, or internet subcultures, leading in the first three cases to bloodier wars.)
There's a lot of fascinating questions that could be asked and investigated, but mostly no one does, because they'd be accused of being Nazis.
Ah OK, thanks. Well, it seems that you and I are in agreement on this.
But Henrich does address the genetic issue. He has a whole chapter on it. His conclusion is that the changes induced by the Church's policies were entirely cultural, not genetic. How they changed the culture is the entire point of the book. The argument for why it isn't genetic is that the changes promoted urbanization and that cities are "genetic death traps", what he calls "the urban graveyard effect". (There is another rarely discussed argument in the book about the Cistercians, and there again Henrich mentions a "genetic death trap".)
In other words, at least according to him natural selection wouldn't favor WEIRD psychology. It had to be a cultural transmission, not genetic.
He may be right or wrong, but he does not ignore the issue.
It was this review, of a book whose main thesis was that the West's rise to pre-eminence arose from the Catholic Church's marriage rules, which weakened kin networks:
https://astralcodexten.substack.com/p/your-book-review-the-weirdest-people
It’s absolutely the work “extractive and inclusive” are doing. They are there to be normative about policies he disapproves of.
Yes, Acemoglu & Robinson think the problem with post-apartheid South Africa is that the state doesn't redistribute enough ("inequality" is their big complaint) rather than that the state can hardly keep basic utilities running. They also thought on Hugo Chavez' death that he hadn't created a political machine to dominate Venezuela and that this gave hope for a democratic Venezuelan future despite his dictatorship. https://web.archive.org/web/20140809144200/http://whynationsfail.com/blog/2013/3/14/paradoxes-of-chavismo.html
I'm a bit confused by their take that you need a strong central government. Not that I can't see arguments for it, but (at least as presented here) the arguments aren't fleshed out enough to take them seriously.
It seems, based on the rest of their arguments, that a weak central government with strong inclusive institutions would be much better than a strong central government interested in extraction. Which at that point you might as well just drop the strong central government angle and concentrate on the inclusive institutions.
Mark Koyama presents an argument for the necessity of state building for inclusion:
https://www.liberalcurrents.com/liberalism-and-jewish-emancipation/
So their argument is that strong government is necessary but not sufficient for a good society? That inclusive institutions will be overrun if not supported by a central government capable of defending them?
If so I'm still uncertain, but can definitely follow the logic and don't have an immediate criticism.
I think they address this exact issue in "The Narrow Corridor". Basically, they argue that balance is needed between "society" and "the state" (not scare quotes, those are their terms) to prevent either from running amok.
I disagreed with some aspects of the book, but I won't get into that here.
Isn't the term for that 'redistribution?' I think AR deliberately use a different word because that's not what they're referring to.
I agree that that's the common term for it, and that it's not what AR are referring to. But the question is, **should** they be referring to it? If they take their theory seriously, and fearlessly pursue its implications, why isn't this one of the things the book focuses on?
Maybe I'm misunderstanding, but I don't think a reasonable person would argue that redistribution is the key to economic growth, just in the sense that you need to have assets to redistribute from one group to another, before that becomes relevant. Ie, You have to figure out the the puzzle of how to build and acquire assets in the first place, which is what the authors are addressing. Figuring out what to do with them comes later.
I think the point is that if one “extracts” from the haves to “redistribute” to the have nots one might also kill the golden goose of good institutions and economic growth.
At what point a society is well off enough and institutions are sufficiently robust that “redistribution” doesn’t have the downsides of “extraction” is an interesting question.
To expand on this, when AR use the term extractive institutions, I think what they're referring to (I haven't read the book but I recall listening to a podcast with Acemoglu once upon a time) is something akin to the "natural state" that Douglass North and his coauthors described in Violence and Social Orders. Here's a good summary:
"In order to have a stable order, a society must deal with the potential for organized violence. In a limited-access order, which the authors often refer to as a “natural state,” groups with the potential for organized violence join in a (possibly fragile) coalition to rule the country. This coalition excludes others from key economic activities, reserving rents for its members. Satisfied by these rents, coalition members refrain from violence. To the extent that limited-access orders are corrupt by American standards, such corruption serves an important role in providing its members with an incentive to remain in the coalition.
https://www.econlib.org/library/Columns/y2015/Klingtwoforms.html
Reviewing their description of "inclusive", it occurs to me that a rather horrifying example might be the antebellum South, where in the same geographical region resources were extracted from one part of the population and distributed to another. The distribution itself wasn't done with an eye toward growth and development, and focused most of the extracted wealth back on agriculture and aspiring aristocrats, so it's not a very successful example of their concept. But if I try to imagine the Confederacy crossed with some bizarro version of socialism, where slaves were public property and their labor used to fund a UBI for non-slaves... Ugh. It starts to sound like something Ursula K. Le Guin might have written in one of her grimmer phases.
See the Draka series from S.M. Stirling (starts with Marching through Georgia, where the title refers to the country not the state I think).
Alternative history where the South lost in the American Civil War and a lot of them ended up emigrating to South Africa instead of going west.
Yes, it's extremely grim.
"According to Aristotle, Phaleas ... recommended setting up dowries for the rich to give to the poor in order to level property ownership over time. In addition to equality of land and education, Phaleas proposed that all artisans be publicly owned slaves."
https://en.wikipedia.org/wiki/Phaleas_of_Chalcedon
"Being inclusive of Paul by being extractive from Peter."
They actually discuss this topic to my memory and explain Soviet and Antebellum South successes with idea re-allocation of resources to more profitable sector gave more than losses on extraction
I don't recall that in the book. But even if they mention it it's a small part that isn't well integrated into the thesis of a 500 page book. And you also have cases that don't involve slavery and executions to keep the suppressed people in line. Of course, any thorough treatment would have to in turn distinguish the times it worked from the times it didn't with a pretty thorough interrogation of what 'worked' means.
For example, a lot of the Soviet Union was kind of cosplaying modernity rather than pursuing actually economically viable industries. I think this actually works fine when it comes to domestic living standards. If you build a bunch of apartment blocks to cosplay that you have urban culture people will move into them and you will actually have an urban culture, if not exactly the one you wanted. But if you cosplay high productivity then you might have steel factories producing real steel but you might not have really raised productivity.
And then there are just bad bets. Like South Carolina betting on agricultural export markets just before a massive crash.
Nah, Acemoglu's thesis (as presented in the review above, I'm not familiar with it first-hand, nor have I been encouraged to by the review in question) seems just outright right-wing to me. I mean, how else would you classify the claim that the institution of private property is the non-extractive end of the scale of more to less expropriation?
Surely, "extraction by elites can be fine, actually" is a much more internally consistent position, but his project is still about defending the very institution that contemporarily facilitates this extraction. I don't think you should make much of the fact he's (superficially and instrumentally) accepting left-coded assumptions to do that.
The examples of E/W Germany and N/S Korea are so seductive! It must, must be the institutions!
But doesn’t work elsewhere, mostly. Poverty, corruption, and violence are the norm; it is the peace and prosperity and the rule of law that are really exceptional and fragile, and we just don’t really know why they happen.
Those examples don't seem to contradict culture/genetics acting partly through institutions if you consider which states actually imposed those institutions(the west/the Soviet Union).
But that’s just the thing, groping for one big explanation is probably futile. Bernstein in “Birth of Plenty” argued that it takes four big things:
Property rights / Rule of law
Capital markets
Education
Transportation
You have to have all four, or things don’t work. But each one is in turn enormously complex, and not a binary.
If all European and East Asian countries without a history of communism have those things to a high enough degree to become developed countries then it seems like two factors explain a lot of the variation in those four big things.
How are "capital markets" separate from "property rights"? If you can't own things, what are you selling?
Good question. Capital markets allocate capital. You can have weird state-owned enterprises that still rely on capital markets for bond financing, for example.
With no property rights, why not just take the financing?
(Actually, I'm aware of 𝘸𝘩𝘺 - the question is really "in what sense do the financiers not possess property rights?")
Oh, easily: bondholders don’t own the enterprise.
But it yes, our dialog points to the underlying complexity of these institutions: there’s no absolute property rights, and there are no perfect capital markets, everything has a degree and a measure. This is why simple explanations using prime colors rarely suffice.
Re: Property rights
Has the rise in civil asset forfeiture created a natural experiment on the loss of reliable property rights? Have the results been analyzed?
CAF isn't common enough to have a wide-ranging effect, at least for most law-abiding citizens. Career criminals who get caught up in it probably have very low feelings of property rights already, even without CAF.
Individual cases of outright government theft are serious but rare. It seems that our institutions are pushing back against it and preventing it from becoming widespread. Or in AR's terminology, while a small group of elites are attempting to set up an extraction system, the larger inclusive institutions are preventing wide-spread adoption and may be reversing what exists now.
If it stays rare, that would indeed be fortunate. I'm having trouble finding good, recent, statistics. https://en.wikipedia.org/wiki/Civil_forfeiture_in_the_United_States says "According to government records, Justice department seizures went from $27 million in 1985 to $556 million in 1993 and $4.2 billion in 2012." Admittedly small compared to the scale of the economy as a whole.
I do agree that there has been some push back from some of our institutions, which is a help.
It is worth noting that there were (and are) fundamental differences between East and West Germany (the border wasn't drawn randomly either).
This Twitter thread is pretty good to visualize some of the differences:
https://twitter.com/essobecker/status/1238013473948200962
Ah, sure, and again points to diminishing returns of simplistic explanations. “Germany” is a young country, its constituent parts had / still have distinct cultures, etc. The “!” In my comment was there sarcastically. Same for N/S Koreas: I bet we could easily split Italy in the same way. Heck, the US for that matter.
The book review commented on this, but it's worth looking in more detail. The difference between the economy in the US and the rest of the world is huge. And the difference between high-wealth countries and low wealth countries is also huge.
Alabama is the US state with the lowest per-capita GDP, at ~$51,000. That is enough to be the same as or higher than any other North American country (just shy of Canada's second place), 5th highest in Asia, almost top 10 in Europe, highest in Africa (over 2.5x the next highest), etc. If you exclude tiny countries with unusual economies (Singapore, Luxembourg), Alabama rates even higher.
Sure, you could split the US or other countries between high income and low income sections, but really the difference between even the poorest parts of rich countries and most of the rest of the world is still very stark.
Thanks for the link! Learned some more about my country. But as I know some: I shrug. Yep, the southern part - Bavaria et al. - was still rural, some areas in the north-west, too (cow-pasture-country). So? "Fundamental differences" between East and West those were not - the T-Rex in the room is two generations of socialist state monopolism. Taking pics every 500 meter in Germany 1989, you would clearly see one country in color and one in dirty-grey. Otoh: 33 years later, one still sees differences (a magnitude smaller, as before 1944). If anything, the East had all the "non-institutional" pre-requisites to succeed as a modern industrialised country. As did the North of Korea. Politicians can do limited good, but unlimited bad.
There is a whole book about "spotting the GDR long before it came to be" and I found it extremely insightful about my own life's experiences, not just in Germany but across Northwestern and Southeastern Europe in general: "The Shortest History of Germany".
It might be criticised for its tendency to paper over too many details, but I think that is exactly its strength: Describing a long arc of history short enough that you can get the larger picture.
> Alert readers may notice a problem here. If you don't know if X causes Y or vice versa, how can you possibly tell if Z causes X and doesn't otherwise affect Y? You can't.
Well, for example, Z may precede X and Y, which excludes reverse causality. In general, Z is a much simpler variable to analyze, and the stories you have to tell in order for Z to affect Y directly get pretty wild. It may not be possible to prove completely that Z is a valid instrument in all cases, but it's probably better than "control for some observables and pray" or "don't even try" which, in many cases, is the alternative.
Maybe the most classic example of IV is the Israeli school experiment, when Israel limited class sizes to 40. A class of 41 would be split up; one of 40 would not. Whether a class has 40 or 41 students effectively random, and shouldn't have any impact on students (or confounders, like neighborhood income) other than through the effect of class size. (Note that we don't look at actual class size, since some 40-student classes will actually be broken up and some won't, which will not be random). While many of AR's instruments are much less clear-cut than this, reducing all of IV to "In reality, what you are mainly hoping for is that the causal effect of Z through X on Y is more intuitively appealing to journal editors and referees than the simple effect of X on Y." is pretty harsh...
> This is why economics is such fun and has such a high reputation among non-economists. Also, the camp-following whores thing.
Ah, yes, that's useful and productive.
I do wonder what number of 41-student classes just had one student transferred instead.
I think the law was for public schools, is that possible in Israel? In the US that seems like it would require the student to move or enroll in private school.
> Also, the camp-following whores thing.
For those not aware, like me 10 minutes ago, this is a reference to an article James Buchanan (Nobel laureate for public choice theory) wrote in the Wall Street Journal against economists that believed increased minimum wage could lead to increased employment.
> Such a claim, if seriously advanced, becomes equivalent to a denial that there is even minimal scientific content in economics, and that, in consequence, economists can do nothing but write as advocates for ideological interests. Fortunately, only a handful of economists are willing to throw over the teachings of two centuries; we have not yet become a bevy of camp–following whores.
I would like economists to advance from proving the scientifically obvious (or becoming camp-following whores) to advancing blatantly superior options
As in say 90% of economists will find a negative effect on hiring and that's nice but there will be a roughly inverse effect on voter choice towards higher minimum wages and therefore, for the love of god, prominently contrast the costs and benefits of that and an earned income tax credit or a reverse payroll tax at low salaries
Do AR, in their analysis of Brazil, examine how (unlike South Korea) the ISI policies never expired on time?
No.
I’ve actually felt that Why Nations Fail was overly maligned, as its bearish opinion about China seemed more and more wrong as the years went by. Until, fairly swiftly, it didn’t.
Koyama & Rubin’s recent book, How the World Became Rich, tried its best to be fairly balanced across theories, and seemed to mostly be in favour of the Why Nations Fail world view. So it seems to have survived a bit of time now. It doesn’t fit explain everything in world history, and we can definitely critique the vagueness of parts, but the core emphasis on democracy, rule of law, and other “inclusive institutions” seems to be on the right track.
Democracy is only associated with good countries because it only WORKS in good countries. There are countries that try and build democracy and fail, and then their crappiness as countries is blamed on a lack of democracy and vice versa for successful democracies. But in both cases, democracy was entirely secondary - the underlying properties of the countries explain why democracy did or didn't work, not the other way around.
Knock China all you want, but there are numerous countries that are vastly more democratic than China that haven't acheived a fraction of their success. Sure, (without AGI etc) China might not be as wealthy as the US in the next century, but all those more-deomcratic-than-china countries won't even get close enough for it to even be considered. And yet, China not beating the US is blamed on a lack of democracy, but China being better than much of the world says nothing negative about democratic countries poorer than china.
Begin with the end in mind!
It's even more rigged than you describe: it's only CALLED "democracy" when it's in "good" countries. Otherwise, it's an "electoral autocracy." And whatever works in good countries gets called "democracy" even as they literally crown kings.
Crowning a figurehead king who has no influence on policy while a competitive electoral process elects a parliament that controls policy does not make a country undemocratic. The people still rule.
Presence of elections alone does not make a democracy. Even if the dictator/ruling party does not cheat (which they usually do, but astonishingly often they would have won the election even without cheating, only not so overwhelmingly) this is empty without independent judiciary and free speech and journalism, because public cannot make an informed decision, and government is not bound by procedures, and it is too easy to eliminate sufficiently popular political alternatives. And of course dictators are often (at least for a time) genuinely popular, and they gain power because they do some good things. Until things go wrong (as they always do), and by that time it is impossible to remove the dictator in peaceful way, and worse, there are usually no real alternatives when you need them, because the dictator ensured that earlier by destroying all outstanding personalities and authorities who do not submit to him/her completely.
> Democracy is only associated with good countries because it only WORKS in good countries. There are countries that try and build democracy and fail, and then their crappiness as countries is blamed on a lack of democracy and vice versa for successful democracies.
There is some truth in that, but it is also misleading. Yes, for a democratic or otherwise country to work its institutions must work, and the government must have actual power, and building institutions people will implicitly listen to and obey (more or less) is very difficult when you are starting from anarchy. Theoretically, it is not that difficult to kickstart development of a very poor country, any half sane economic policy will put them on the (initially) fast development track. However this is useless if you do not have the authority to implement those policies. And free elections and judiciary are not very useful when the actual power (also to deal violence) lies within mafia, criminals, warlords, etc. (see e.g., attempts to introduce elections in Iraq). This is why sane dictators often do a better job (initially) than poor attempts at democracy. Problem is, dictators do not remain sane for long, but even if they do not go insane, they do a very good job of destroying all the people with authority and skill which are not completely beholden to them, and the institutions which they build work better than anarchy, but are ultimately dysfunctional because of inherent corruption and distrust of initiative. Genuine functioning democracy is always better than dictatorship (there is no contest about it) but building it is non-trivial. And it is also non-trivial to pass from dictatorship to democracy when the dictator outlives his/hers welcome. And sane dictatorship may be better than anarchy (for a time at least).
As to China: Yes it seems (for now) richer than many democracies. However,
1. It is all now going to hell, though I suspect the system was rotting for a very long time, it is just now too rotten for CCP to be able to hide it anymore.
2. I am not a specialist on China, but as far as I know, communist China is a society divided into classes, where citizens of first tier cities enjoy (or enjoyed until recently) western level of life or better (though far fewer rights), but rural China is still a very poor third world, with peasants having even fewer rights than urban Chinese. So China is very rich in some places, but very poor in other, and comparison with other countries is complex.
3. While I would prefer China to to a complete mafia ridden anarchy, I would still prefer living in a much poorer democratic country enjoying protection of law against vagaries of government and fellow citizens: It is better to be poorer but secure in what you have, than very rich when your property can be taken from you any moment.
4. It is hardly a miracle that China developed very fast after insanity of Mao, after they introduced some sane economic reforms, permitting private initiative by citizens. It is telling though that Chinese policies were more or less sane (not completely, of course, see the demographic policies, three gorges dam, etc) as long as there was some internal democracy within the party. Yes, it was "collective decision making and balance of powers, and free exchange of information" only for the very narrow elites (not even the rank and file of the party) but it existed. A fast decline correlates nicely with Xi taking over and eliminating internal criticism, balance of power and collective decision making.
Your property can be taken from you at any moment in "democracies" too; eminent domain seizures aren't unique to authoritarian dictatorships.
And let's not forget the time virtually every Western democracy put its entire population under house arrest for an indefinite period of time. So much for "protection of law against vagaries of government".
Without going into discussion whether this was necessary (I think it was, at least initially) there was some effort to compensate businesses for lost income, unlike in China. Also, even the toughest lockdowns in the west did not involve literally welding doors to people houses as actually was quite common in China. Also lockdowns ended relatively quickly after vaccines were available (it would end much quicker if not for Omicron). In China lockdowns ended only at the end of last year when the west already forgotten about masks and lockdowns. It is a pity people underestimate how hard can the situation be in authoritarian countries, and then they say: yes our freedom are also infringed, it is the same or worse as on autocracies. No, it isn't. It really isn't.
Firstly, even if our lockdowns didn't go quite as far as China's, they would still have been regarded as cartoonishly totalitarian just a few years ago, and so are still a valid counter-example.
Secondly, China's just one country. Were the lockdowns in other authoritarian countries, like Russia or Singapore, notably more severe or brutal than those in the West?
No one would argue institutions aren’t important.
This book is arguing they are the only thing that is important. Pretty strongly too. And poorly.
I would love to take them and slap them in Antarctica with a bunch of amazing institutions and see how the economy develops. Better yet if we can do it with them and a bunch of afghans or Somalis.
> I would love to take them and slap them in Antarctica with a bunch of amazing institutions and see how the economy develops.
This sounds intuitive, but it runs into the problem that, for example, sub-Saharan countries were widely predicted to have brighter futures than South Korea because of their superior natural resources, or that Iceland was very successful by establishing itself as a finance hub. I believe Singapore established itself as an oil refinery, despite having no oil production.
In the case of Singapore, that worked well in part because Singapore is very strategically located. But Iceland isn't. There's a lot of work that can be done anywhere. Korea is a good place to grow grain - like Iceland! - but if it had to import all of its food, it would still be a rich country.
What’s the problem? No one is claiming geography is everything. But it isn’t nothing either.
Iceland was already a fairly successful country, there isn’t much to explain in terms of its development. Well off countries with small populations have lots of options for parasitizing off the larger global economy.
The problem is that geography is the only reason to expect an Antarctic colony to fail. By implying that it will, you're endorsing the idea that geography is everything.
No I am endorsing the idea of individually necessary and jointly sufficient criteria. An important concept and one this book throws in the garbage.
Institutions aren’t enough.
But there aren't individually necessary criteria. How is that an improvement?
Iceland actually is relatively resource rich because of the cheap electricity, fish, and natural beauty. It has very cheap electricity (they produce more electricity per capita than any other country) because of the natural environment that allows for extensive hydro power and geothermal power. That cheap electricity means that aluminum can be made very cheaply and exported. Iceland also catches a huge amount of fish, more than the UK (which has 200 times the population!). And the natural beauty draws a large tourism industry. Those three things alone are more than half of the GDP, and all would work without it being a finance hub.
Of course, it does have a finance hub, but that happened after it was already getting rich from those resources. And it was historically resource-poor, since it didn't have the resources to bootstrap those industries, but after it got investment from other countries it was able to succeed.
> Iceland also catches a huge amount of fish, more than the UK (which has 200 times the population!).
But Iceland doesn't have 200 times the amount of fish that England has, so it's not immediately obvious how we should interpret this fact.
It looks a lot like "in England, they've got better things to do than catch fish, but in Iceland they don't", which would make Iceland a poor country, not a rich one. Kind of like arguing that some hypothetical country's huge production of shepherd's crooks meant that that country was an industrial powerhouse.
Catching fish might not be as profitable per person as finance, but it's certainly not a poor-person activity like sheep herding. There's big money in it.
The real reason Iceland catches more fish than any other European country is because it's got a) a long cultural history with associated support from government and b) a huge, productive section of ocean all to itself. Same with Canada and Alaska.
It’s really too early to say anything about China. At the moment the group-think in the west seems to want to believe that there’s a permanent slowdown to very low numbers. The recent hysteria is based on one quarter of gdp increases, which was then annualised.
Um, no. The group think was that China is exceptional. The west is now waking up to the reality, which is not based just on GDP data, but many other economic indicators. All of this might not have fatal, if not for the insane politics. Xi is destroying private market in China (such as it was). And there is this:
https://www.telegraph.co.uk/world-news/2023/08/01/china-mi5-social-media-snoop-neighbours/
I do not need to know anything more than that to understand that this is very bad, and the era of "forget about politics, earn money" is over. Maybe it won't be as bad as during Mao (let us hope for the sake of Chinese citizens), but regardless of economic crisis China is now dragged down by Xi into a nightmare faster and faster
The nightmare being 6.3% growth this year.
China is little different in authoritarianism than when Xi was feted in the west. If there was a groupthink then, the anti Chinese rhetoric is clearly another form now.
First, do you seriously believe those numbers? Or any official data coming from authoritarian regimes, not just China? Incidentally, they stopped publishing some economic indicators (like about unemployment) which are so bad they cannot be even realistically falsified. And yes, authoritarianism in China a few years ago was already horrible, but it can get far worse. But yes, the West ignored the China's and Russia's authoritarianism and human rights violations because it was good for business. And then comes 2020's and the sudden realization that all this profit also feeds hostile militaries, and also that perhaps putting your vital production facilities in, or becoming energy dependent on a potentially hostile country which does not respect property rights and has nuclear weapons is not the brightest idea. And if this was not argument enough, at least in case of China Covid closures, industrial espionage and hostile political climate soured business relationship. So yes the West was stupid and shortsighted, but now at least it is able to look at China without pink glasses.
I do accept the GDP figures. Precisely because they do in fact curtail other data.
What you are saying in your last paragraph is that you are ok with bad dictatorships if they are on your side. There’s no morality there, so let’s not pretend there is.
My feeling is that the west (ie America) is actually panicking about losing total dominance across the world. If China were as authoritarian internally but not challenging American hegemony then the concern about internal repression would be non existent.
We know this because when Xi visited the U.K. not that long ago he got the biggest state visit in U.K. history and few protests.
At that time the Western media had not decided that China was the new existential threat, it was probably still Islam. Anyway at least you admit that you were not always at war with east Asia.
> What you are saying in your last paragraph is that you are ok with bad dictatorships if they are on your side.
I said no such thing. I pointed out that the already morally reprehensible decision to do business with China came back to bite the West, and so it was not just immoral, but also irrational. Please do not put in my keyboard opinions which are not there. It is unfortunate (but constantly repeated error) on the side of many western powers to ignore human rights issues when it seems to serve their short term interest. It is never a good policy long term.
Communist China will not dominate the world (future democratic China, why not, maybe, I have nothing against). But before it falls hard it can do a lot of damage to their own people and other nations
I don't believe that China GDP figures reflect reality.
I tend to believe Noah Smith who says that China is in big trouble. It has had a good growth and everything but it is going to hit a wall.
Something similar happened with the Soviet Union. It had industrialization, a good growth and everything. And yet it had immense structural problems and people couldn't enjoy this growth due to constant shortages, lack of free market produced a lot of consumer goods that people didn't like. Ultimately it hit a wall and crashed.
The "sudden realization" did not come in the 2020s. Trump ran his whole campaign on de-globalization and "tough on China" stances in 2015 and 2016. It just took until the 2020s for the elites to realize he was right.
There were many people criticizing business relations with China even long before Trump, they were just not mainstream enough to influence the policy. I am not sure Trump took "tough on China" policy for the right reasons:
https://economictimes.indiatimes.com/news/international/us/ex-u-s-president-donald-trump-praises-chinese-president-xi-jinping/articleshow/101992752.cms?from=mdr
I do not appreciate his judgement of Xi character above (wrong and creepy in the mouth of former, and what is even worse possibly future president of US), but, yes, in his tough on China policy he was generally right (I cannot judge details of implementation). I doubt Trump was some sage seeing deeper than others. I think of him rather like a randomization procedure, and as machine learning teaches us such procedures are often very useful for escaping from local minima (when used in moderation!). In this case the "random" choice was spot on, and helped to break the spell:
https://www.axios.com/2021/01/19/trump-china-policy-special-report
Still, the real jolt came with Covid, when people saw how vulnerable are supply chains, and that economic hyper efficiency which excludes security is not the path to economic development but to early extinction.
Also, by a nightmare I meant police state, not just economy (it was always a police state, but it is getting worse)
Fewer people in jail than the US.
I really thought we are having a serious discussion.
It depends on whether you include internment camps in the West, doesn't it?
"Political insitutions" are not fundamental. They're downstream of many other things, like genetics and culture. It's absurd to talk about the "nordic model" as independent of nordic PEOPLE. Haiti can not and will not ever have the 'nordic model' implemented in their country, regardless of who's in charge and how much power they have, because such a 'model' depends on a kind of people which categorically do not exist in Haiti. There's a lot of ways in which this is true, but having the raw economic output required to fund such a model (which must necessarily come before such a model is established - you can't pay for anything otherwise) is surely the most basic. But then of course there's having good people who don't like violent crime, people with low future time orientation, people capable of building high trust societies etc, basically everything that was selected for in Northern Europe during it's inadvertant eugenics program (i.e. it's capital punishment heavy justice systems of the past).
But anyway, this is a strong review compared to most others if only for it's brilliant brevity.
Which place in the world didn't have capital punishment heavy justice systems in the past? Haiti certainly did when it was a slave colony, and one of the most brutal to ever exist at that.
Have there been any studies comparing how capital-punishment-heavy Northern Europe was compared to other parts of the world?
The common view among native scholars up here in the North is that " there is a Nordic model, and five exceptions".
Mercifully to the point, on-topic, readable, and no digressive distactions. Understated unobtrusive humour a plus. I don't really mind the lack of "And the moral of the story is" galaxy-brained extrapolative conclusion which is a regular feature of ACX book reviews, since those so often get out over their skis in ways that detract from the main course. Solidly approve.
Yeah, and yet I have a hard time voting for a review that says, "Don't read this book".
You should reward them for potentially saving people a wasted time investment.
I've thought from the outset that there will be a bias in favor of gushing and enthusiastic reviews, and have been awaiting an ambivalent one to see if it will suffer from shoot the messenger syndrome!
I strongly approve of the honesty and don't mind a review that says "not worth your time." If I were someone looking for a book of this type, he just saved me a bunch of hours by referring me to the actual economic studies that better answer the questions.
I feel like the conclusion of "Don't read this book of an extremely well respected economist who is likely to get a Nobel Prize because he's wrong about his life work, and you should not put his ideas into practice" counts as a moral of the story galaxy-brained extrapolativr conclusion. Not a knock on the review, just pointing out that that conclusion felt par for the course for an ACX review.
Isn't that just an appeal to authority? Seemed well-demonstrated to me that while the actual empirical backing in research papers x, y, z is quite good and accessible, the book itself bungles the translation by trying to simplify and narrativize things for a Popular Audience...while also missing key beats of the popsci genre, like actually being interesting and engaging to read for a non-SME. As the review says, why read 500 pages of uninspired circular prose when the papers it's based on are way shorter and more illuminating? Compare to, say, last year's winner The Dawn of Everything, where David^2 are widely agreed to be wrong about much of the evidence, but it's a very fun read and one of those wrong-useful models anyway.
More than that, I think it's useful in general to have some negative reviews thrown into the mix. Some reviewers really like the tomes they review, but others really seem to stretch for positivity bias...not wanting to diss the Famous Well Regarded Author/Book, thinking it must be a problem with them rather than the text, etc. Life's short and most people don't read at Tyler Cowen's pace though - I'll take a strong signal (in either direction) over caveated qualified praise.
The conclusion was "read their papers instead of the book because the book doesn't present evidence".
Very fair review. Why Nations Fail was very disappointing. It was vague and rambling, and while I didn't come away thinking they were wrong, I didn't come away thinking they were right either. It was generally difficult to figure out what their thesis even was, at any detailed level, and whether they had presented any kind of evidence to support it. I wasn't inspired to put in the effort to try to answer those questions, so thanks for having done so. My main take away was "why are these guys so famous?" - so I'm glad you addressed that as well. I'll check out some of their papers, as you suggest.
I did this book as part of a reading group recently, and thought it was pretty much pure sophistry. So much construction of tautological frameworks of technical terms that mean nothing (is “institutions” is mostly just a way to smuggle in “culture” without hurting peoples feelies).
The arguments against geography or other elements were nearly wholly absent and unconvincing where present.
The historical examples seemed a little cherry picked and when there were counterexamples often just hand waved away through definitional high jinks.
The book mostly doesn’t touch very clearly the few examples of actual economic growth/development we have, nor how the “extractive/inclusive” framing is at all helpful other than as a way to smuggle in prior assumptions/values.
Anyway, just reinforces my priors that the people in these (admittedly difficult) fields are still in the absolute wilderness.
Anyway I had a whole giant word document of notes and criticisms, maybe I will find it.
AR measure extractive institutions vs inclusive in very narrative way, that's my biggest critics
As thought experiment imagine:
- In Kolechia all young people are forced to pay 1/4 of their income to old people, weighted by their social status
- In Arstotzka education system sets kids on rigid tracks to certain social class very early, making it hard to change and forging perfect ideology for that
- In Antegria there kids are forced to go at nearby school
- In Obrastan half of state jobs pay basically for burocrats existing
All of that exists in first world as well and AR seems not to make questions why certain institutions
"Like, you can describe nearly every modern liberal democracy as money pump extracting 1/4 of young people labor to pockets of old"
Where do you get 1/4?
I understand the basic principle, but in the US Social Security is about 12.4% (half 'paid' by the employee and half 'paid' by the employer). Bu this is capped at about $160,000 of income. Then we have some Medicare taxes. But I'm not getting to 25%.
Are the European taxes that much higher? Or what?
My bad, I took numbers from top of my head
In Germany pension tax is 18% + about 2.5% gdp in subsidies from budget
With 18% the point stands, it stands even with 12.4%
It's still more than typical 10% paid by serfs to landlords, which AR mentioned as "highly extractive system"
The collective beneficiary and their approximate overlap with exploited doesn't change it for them, they also call USSR and Spanish public works in colonies as extraction institutes
Thanks!
And 20% is pretty close to 1/4 anyway. So higher taxes in Germany (which is west!) makes sense.
If you want to, you can even point to US tax policies such as Prop 13 in California as effectively on average a transfer of money from the young to the old. This would boost the US transfer number a bit.
Point is clear.
Let's not forget the actual "fine print" reason for Prop 13—i.e. it kept property taxes stable and low for commercial real estate. The corporation that owns the giant office campus I work at pays the county less in taxes than I pay on my California bungalow because they're still paying the same tax rate that they were paying in 1978 (with 2% increases) than I pay for my house (purchased much more recently). Prop 13 was functionally a bargain that its corporate backers made with CA homeowners at the time to keep their taxes low for all time. So it favors elderly homeowners who've owned their house the longest, and corporate real estate owners who sit on real estate and extract rents.
Prop 13 also severely disincentivizes development of existing property by making it the occasion of a tax reassessment.
In Germany, the 18% pension tax are only the tip of the iceberg if you want to talk about inter-generational justice.
The (non-private) health insurance is paid both by pensioners and workers (both effectively pay 14.6% in health insurance) and 3.4% nursing insurance. It seems likely that the younger workers subsidize the health care of the pensioners.
(Also, because simply deducing these from the paycheck would not satisfy the German love of over-complicated solutions, the "Lohnnebenkosten" are split roughly (see Wikipedia for all the gory details!) 50-50 between the employer and the employee. So if you earn X on paper, the employer pays an additional 21% of that, and then you get X*(1-21%) minus taxes in cash. The gap between what your employer pays for you and what you get out is thus not 21%+21%. It seems like every euro you earn (before taxes, after deductions) costs your employer 1.5 euro. Also, I am very much not a tax lawyer.)
I think in static times, such a system in which the currently employed pay for the current pensioners works fine: if you are a cowherd, and your grandfather was a cowherd, and his grandfather too, and the population size in your village has been stable for a few centuries, nobody can complain, and it certainly beats people having to hoard gold to survive in old age.
If the population pyramid looks nothing like a pyramid, the pay-as-you-go system starts to resemble an Ponzi scheme. (The population "pyramid" also affects the size of various voter blocks, so politicians can afford to increase the costs of university education while cutting pension subsidies will go badly with key demographics.)
(As a formerly young person, I can not complain too much about this personally given that my parents paid for my lengthy education, but I would totally understand any young person who paid for their education with side jobs or debts feeling some degree of resentment towards today's pensioners who studied under more generous tax-funded programs and then voted to burn that bridge after they had passed it. Add to that that a 17yo has no say over the continued running of coal plants while a 70yo has their vote, and I can see some reason for inter-generational conflict even without differences in home ownership rates etc.)
>>> But by any ordinary meaning of "technological change" this statement is patently ridiculous: horses were replaced with tractors, employment shifted from agriculture to industry, the production of steel, electricity and machine tools grew exponentially, and city dwellers moved into highrise apartments with radio, TV and refrigerators.
Soviet manufacturing was heavily dependent on buying/stealing technology from the West. Machine tools were largely purchased from (West) Germany. Soviets and then Russia never tried to wean themselves of Western precision machine technology and create their own machine tools. Soviets were in the same boat with computers. They copied Western designs using Western-sourced parts. They continued using vacuum tubes in electronics long after the rest of the world mostly abandoned them. Starting in 1929, the Ford Motor built and managed soviet car and tractor manufacturing plants. They sent senior engineers and managers over from the US to manage these plants. US companies largely kept Soviet war production up and running after Hitler invaded the USSR. Likewise, the Soviets had to steal the plans for A-bombs and then H-bombs from the US. They also stole the plans for plants that processed the materials for these weapons.
In fact, I can't think of any original technology that came out of the Soviet Union or post-Soviet Russia. Not that they don't have excellent engineering schools and universities. But they didn't/don't have a culture that allowed innovation. That was was an institutional and cultural failure on the part of the Soviets — and then the Russians.
"Soviets were in the same boat with computers. They copied Western designs using Western-sourced parts."
I am, G*d help me, going to speak up in defense of the Soviet computer engineers.
Until around 1970 the Soviets had their own computer designs and were actually making computers of their own design rather than just copying western models (e.g. 8088, PDP-11, VAX). Then the folks in charge of the entire Soviet economy decided that this was uneconomic and that it was cheaper/better to steal western designs and reverse engineer them.
So that's what happened.
But prior to this time the Soviets were designing their own computers. One example would be the BESM-6.
Were the Soviets able to keep up with semiconductor manufacturing technology? No.
And their domestic design bureaus were (mostly) killed off by their central planners.
But it isn't as if the Soviets *only* copied western designs for computers. They eventually (mostly) did, but through about 1970 they created (and tried to manufacture) their own designs. Heck, they even built a ternary computer at one point!
Reactive armor (for tanks) seems to be a Soviet invention.
I expect that there are others.
Not as innovative as "the west," but not entirely derivative, either.
There was nothing wrong with their engineers. The entire problem was with their system of incentives
I had forgotten that chapter in Soviet computer design. Thanks for keeping me honest! And for some reason, I thought reactive armor was an Israeli invention—but, yes it was an invention/idea that Soviet engineers came up with—but I guess they never exploited it. So, I think these are perfect examples of institutional failure that the reviewer had trouble swallowing. OTOH, Soviet and Russian engineers have always been masters of the KISS principle because they worked under constraints that Western engineers didn't have.
https://en.wikipedia.org/wiki/Reactive_armour
"In fact, I can't think of any original technology that came out of the Soviet Union or post-Soviet Russia."
I suppose it depends on what one counts as a technology, but Sputnik and Gagarin preceded their western equivalents. And no other nation has taken photos on the surface of Venus.
Eh, the V2 preceded both Cold War sides' space programs; it was determined by whose Germans were more effective.
Very true about the V2! And that, in turn, built on Goddard's work. This is why I put in the qualifier about what counts as a technology. Just about any technological advance has precursors. Also, despite the jokes about "their German scientists got ahead of our German scientists", https://en.wikipedia.org/wiki/Sergei_Korolev was important in the Soviet's space program.
( None of this is to praise the Soviet system, just to note that beowulf888's "In fact, I can't think of any original technology that came out of the Soviet Union or post-Soviet Russia." is an overreach. )
And both the US and Soviets, used captured German scientists and engineers to kickstart their ICBM and space programs.
True!
https://en.wikipedia.org/wiki/Wernher_von_Braun
https://en.wikipedia.org/wiki/Operation_Paperclip
( not sure what the Soviet equivalent to paperclip was called, but it certainly existed )
But, as you said, this was indeed a "kickstart" to their ICBM programs, not the entirety of either power's program.
A-bombs were stolen, but I don't think H-bombs were. They had to come up with those themselves (though they knew it was possible). America also didn't join the war until some time after Barbarossa, with Lend Lease taking enough time to arrive that they basically won Stalingrad by themselves.
We're pretty sure that there was an awful lot of stuff getting there a long time before the official stuff started arriving.
The official stuff was things like warplanes. The unofficial stuff was things like trucks and food.
In late 1940s, Klaus Fuchs was working in UK coordinating with US on H-Bomb development while passing secrets to Soviets. Whether Soviets could have figured it out on their own is another question, but some have argued that Fuchs gave them info that significantly sped up their H-Bomb program...
https://www.smithsonianmag.com/history/spies-who-spilled-atomic-bomb-secrets-12792
Operation Barbarossa started June of 1941. Convoys of military equipment started flowing from UK and US in August of 1941...
https://www.thehenryford.org/collections-and-research/digital-collections/artifact/66554/#:~:text=Summary,to%20oversee%20construction%20and%20startup.
The Lend-Lease program sent the Soviet Union...
4.5 million tons of food
400,000 jeeps & trucks
14,000 airplanes
8,000 tractors
13,000 tanks
1.5 million blankets
15 million pairs of army boots
107,000 tons of cotton
2.7 million tons of petrol products
https://ru.usembassy.gov/world-war-ii-allies-u-s-lend-lease-to-the-soviet-union-1941-1945/
Stalingrad fought from Aug 42 to Feb 43. By that time Lend Lease was in full swing.
Josef Stalin toasted the success of the Lend-Lease program at the November 1943 Tehran conference with Churchill and Roosevelt...
"I want to tell you what, from the Russian point of view, the president and the United States have done for victory in this war. The most important things in this war are the machines.... The United States is a country of machines. Without the machines we received through Lend-Lease, we would have lost the war."
In memoirs, Nikita Khrushchev said the same...
"If the United States had not helped us, we would not have won the war," he wrote in his memoirs. "One-on-one against Hitler's Germany, we would not have withstood its onslaught and would have lost the war. No one talks about this officially, and Stalin never, I think, left any written traces of his opinion, but I can say that he expressed this view several times in conversations with me."
Your first link returns a not found and your second is for an event in 1929. Did you intend to provide different links?
So what. The technology changed even if it was “stolen”, borrowed or bought from the west. The idea that there was no economic or technological change in the Soviet Union from 1917 to the end is preposterous. At the time it was rated as the worlds second or third large economy. Hence “super power”.
Yet for some strange and unknowable reason the Soviet Union collapsed.
As for being a superpower, that mostly depended on ICBMs with nuclear payloads and projecting a show of military strength. ) The Soviets inflated their own economic numbers. They couldn't produce enough food to feed themselves despite owning one of the best grain-growing regions of the world (Ukraine). They did have the national skill of creating Potemkin villages, though.
And even if it were a superpower at its peak in the 1960s and 70s—post-Soviet Russia's invasion of Ukraine has shown that didn't have the institutional organization to maintain their superpower status.-
The whole 'instrumental variables' methodology sounds deeply sketchy.
The review:
Clear, well-written, straightforward, and understandable. I tend to prefer reviews that are enthusiastic about the book they're reviewing, but sometimes when you set out to review a book, that just doesn't happen. And if we never see those reviews, that way lies p-hacking and the replication crisis. I very much appreciate the constructive approach to disagreement, where the reviewer pointed out papers by the same authors which made the authors' point better than their book. That feels like a behavior that I want to encourage and reward in these book reviews.
I would prefer a bit more of the original text, and relatedly I don't feel I got a visceral sense of what the book would read like to someone who agreed with it. But that feels like a nice-to-have. It certainly would have made the review longer, and I have to respect the brevity of this one.
The book:
Like I said, I don't have a good sense of it. I've read some books that had that "Old Testament" feel that the reviewer describes, so I have to assume that it's like that. The best ones were presenting concepts that currently defy human description, while the worst were propaganda for an ideology. I get the impression that this was closer to the propaganda side, but without a coherent ideology to back it up.
What is "inclusive" and "extractive"? What is upstream of "institutions"? Do good "institutions" ever fail and do bad "institutions" ever succeed, or are they defined in terms of their success and failure? There were some basic questions here that didn't seem to have answers in the review, and the review leaves the impression (or outright states) that the book never answers them either.
What I really want from this review is more time spent on how AR define "institutions", "extractive", and "inclusive". I feel that without a better sense of what AR mean by those terms, I won't understand what the book is saying.
I read the book about a year ago. The biggest problem with it is that it's extremely boring and repetitive. The second biggest problem is that the definitions of "inclusive" and "extractive" are circular. It seems like they've done this deliberately in an attempt to make it understandable to a popular audience, but it results in it being really dumbed down, and makes points that are either obvious or unconvincing.
They use "inclusive" and "extractive" for both economic and political "institutions". By "extractive economic institutions" they mean economic conditions that result in elites being able to extract wealth for themselves while impoverishing non-elites. The argument is that non-elites have no incentive to be more productive as any excess wealth produced will just be extracted by the elites, and no economic mobility as existing elites will leverage the institutions they control to prevent anyone else from becoming elites, the result is that the total wealth of the society will be lessened. This is the obviously true part.
They give examples of economic institutions that lead to extraction, but they never really give a synthesis of what all these examples have in common that leads to them being "extractive institutions", other than that they all lead to extraction, which is why they have had to rely on a circular definition.
By "extractive" political institutions they mean political systems that inevitably lead to "extractive" economic institutions, by which mean non-democracies vs democracies today, slave colonies vs free colonies in colonial times (e.g. Colonial Peru vs Colonial Australia), and Medieval/Early modern societies with greater aristocratic rights vs the monarch, and greater merchant and peasant rights (e.g. England vs Spain). "Extractive" is a very forced term here when "exclusive" would have been more appropriate, but you can see that the definition of "inclusive" vs "extractive" political systems is more coherent. To be "inclusive" means to have more rights and power in the hands of more people, which will result in economic institutions being shaped to the need of non-elites. The problem here is that by forcing the "extractive" term on these political institutions, they are already asserting that these will necessarily lead to "extractive" economic institutions. It seems obvious that what would be better called "exclusive" political institutions are more likely to lead to "extractive" economic institutions, but it's not obvious that this will always be the case, so I find it hard to justify this choice of definition.
Some of this might seem like a nitpick, but it's not, because use these terms practically every second sentence, which even if there were no problem with these terms, would be enough to make the book trash.
Ugh. Thanks for the write-up.
Interesting read, one of he reviews that was able to be clear without being too preachy!
For a much more interesting analysis of the causes of growth-enhancing vs. growth-inhibiting institutions, I recommend "Systemic Vulnerability and the Origins of Developmental States: Northeast and Southeast Asia in Comparative Perspective" by Richard F. Doner, Bryan K. Ritchie, and Dan Slater, published in International Organization 59, Spring 2005, pp. 327-361. Their abstract:
"Scholars of development have learned a great deal about what economic institutions do, but much less about the origins of such arrangements. This article introduces and assesses a new political explanation for the origins of "developmental states"—organizational complexes in which expert and coherent bureaucratic agencies collaborate with organized private sectors to spur national economic transformation. Conventional wisdom holds that developmental states in South Korea, Taiwan, and Singapore result from "state autonomy," especially from popular pressures. We argue that these states' impressive capacities actually emerged from the challenges of delivering side payments to restive popular sectors under conditions of extreme geopolitical insecurity and severe resource constraints. Such an interactive condition of "systemic vulnerability" never confronted ruling elites in Indonesia, Malaysia, the Philippines, or Thailand—allowing them to uphold political coalitions, and hence to retain power, with much less ambitious state-building efforts."
It is worth noting that some of AR's empirical work has not aged well. Here is a critical comment of considerable length that was published in a top economics journal.
https://www.jstor.org/stable/41724681
Geography does matter: all else being equal, it would be a lot harder for Chad to be rich than for France to be rich because Chad is not a very desirable piece of real estate for humans, while France is really nice.
It would seem like a study of the impact of institutions might look at relatively comparable countries, like central America. I wouldn't at all be surprised if some Latin American countries have more predatory ruling elites than others and that the nastier the rulers, the worse the economic performance of, say, the median citizen. But ranking the institutions of Central American countries and seeing how their economic performance correlates seems like a task for a historian or area expert rather than an economist taking a 35,000 foot perspective of all the countries on earth and deciding that, by definition, those with worse economic performances must have worse institutions.
In this century, a heartening economic performance has been that of Panama, which is considerably more prosperous than it was in 2000. I presume it has to do with Panama successfully executing a big project from 2007 to 2016 (only two years longer than originally hoped) to expand the Panama Canal and thus the fees it collects from shipping. I don't know if the project will pay off in the long run (it depends to a large extent on American imports from China continuing to increase, which can't continue forever), but it seems to have been more competently implemented than, say, the embarrassing California High Speed Rail project that was passed a couple of years later.
I may just be ignorant of sordid details, but in general Panama seems to have had a vigorous open public debate over the project, followed by a democratic referendum endorsing canal expansion by about 3 to 1, then a reasonably quick construction project, and the greater shipping was seeming to benefit the economy, at least up until covid confused matters. That seems on the surface as if Panama developed some reasonably functional institutions to allow it to carry this out. It would be interesting to know more about how a country in a region with notoriously extractive institutions traditionally achieved what seems like impressive maturation.
It does help a lot when the project doesn't get tied up in a million lawsuits.
"...it seems to have been more competently implemented than, say, the embarrassing California High Speed Rail project that was passed a couple of years later. "
You are just saying that because Panama spent only $5.4 billion on this project and actually got the desired expansion while new estimates for California High Speed Rail final costs seem to be ~$135 billion (up from $33 billion when Prop 1A passed) and 15 years after approving the project we still don't have anything resembling high speed rail.
But if the competence in question is directing money to favored constituencies, however, I can make a good case that California's High Speed Rail project is much more of a success.
So the Californians can not go on the high speed rail, but at least some of them get to ride the gravy train?
I think Panama is rather unique in that it is a tiny (~4M people) country located optimally to build that famous canal. The state of Panama was backed from the beginning by the US which had a considerable strategic interest in the Canal (and ran it until 1999).
Other special cases include Hawaii (also US geostrategic interest), Kuwait (Oil), Israel (Immigration of highly educated people, US backing).
So if Panama is doing great, good for them, but unless you can get the US to do similar investments in every other country in the Americas, the lessions from Panama do not seem very transferable.
Panama appears, at last glance, to be exploiting its geographic advantage reasonably well, which is more than quite a few countries can say. I wouldn't have bet on Panama doing that much, but I'm happy to say I appear to be wrong (I hope).
Panama is like Ireland. Income is overstated due to financial withholdings from foreigners.
They still doing great but numbers are not accurate, basically.
Dollarization is useful in itself and as a signal of a safe and pretty much no questions asked business environment. Maimi but not subject to US law. They were the “Panama Papers,” not the “Denmark Papers.” And a pleasant place.
It doesn't matter relative to the huge disparities we're seeing today. French GDP per capita wasn't much different than Africa's in 1AD. By 1000AD, the average African was producing half of what the average Frenchman produced. Today, the average African produces 1/20th of what the average Frenchman produces. The geography of these countries hasn't changed much over this period, so there's got to be something else going on that explains the huge divergence in terms of per-person production.
I am not sure the 1AD figures are very reliable. More importantly, if economists know anything they should know that small differences compounding over a long time can lead to a big impact.
Say France geographically is only 5% more productive per generation once you have ironworking.
Well for a long time places will look similar. But eventually you will see huge divergence. I for sure don’t think geography is the sole determinant, but the people arguing it is nothing are just being silly.
If you swap the position of British North America and Brazil, the new British colony in SA ends up much less rich, even mandating the same institutions.
"If you swap the position of British North America and Brazil, the new British colony in SA ends up much less rich, even mandating the same institutions."
Does it? I can imagine few worse places to build a country than the barren wasteland that is British North America (by which I assume you mean modern Canada). The lush Amazon rainforest, meanwhile, abounds in resources. Brazil is certainly a much more hospitable place than Iceland, Norway, Sweden, and Finland, yet those are among the world's most prosperous and most well governed countries.
No I mean the US. If you swap the 13 colonies with Brazil the “US” in the Amazon doesn’t do nearly so well.
Where does `manifest destiny' stop in this counterfactual history, and is there any good reason to believe that it stops at the borders of modern day Brazil?
ETA: Sounds like a fun alt history actually. I'd read that novel, if one were written.
I'm not really sure why geography is giving a stacking benefit that increases each generation. The geography isn't changing.
If we take the interplay between geography and technology (defined broadly as the ability of humans to react to their environment) then I totally agree that this matters a lot for GDP. And it makes sense why humans could, each generation, improve their situation even as the underlying geography stays the same.
By way of example, Miami has had the same geography forever. In 1896, Miami had ~300 residents. Today, it has over 400,000 residents. What happened in between? In 1897, it was discovered that malaria is spread by mosquitoes. Florida undertook a massive anti-malaria campaign, which lasted decades. That transformed Miami and made it the city we know today.
Applying a fixed per-generation multiplier really misses the point. Geography presents challenges that can be overcome by technology (defined broadly). New technologies present new opportunities that can be exploited, according to human needs, which are largely socially defined (so Florida can take snowbirds fleeing New York, who wouldn't want to move to Madagascar, even if Madagascar eliminated malaria).
I think you're correct that swapping the position of British North America and Brazil would make the new British colony poorer, but if you brought the residents of Silicon Valley and America's hydrocarbon reserves, I think the drop would be pretty negligible.
After all, Saudi Arabia has some of the worst geography on the face of the Earth and they're swimming in money.
Because the geography directly leads to surpluses and surpluses are what matters.
That makes sense, but I'm not sure that matches the historical data? Singapore had a population of 150 as late as 1820. Meanwhile, ancient Egypt had a population of 6.5 million people and was the breadbasket of the Roman Empire. Today, Singapore is much, much, much richer than Egypt.
I'm not sure that looking at the geography of a place tells you that much about its success in today's world. Likewise, its population and wealth in, say, the 1800s, only sometimes tells you about its population and wealth today. The richest countries all seem to be complete outliers, as though there's something else going on beyond just their innate starting advantage.
> French GDP per capita wasn't much different than Africa's in 1AD.
This is not a plausible claim.
Why? Setting aside the problem inherent with comparing a small portion of Europe to an entire continent.
Because there are a lot of public monuments from that period in France, and none in most of Africa.
> Setting aside the problem inherent with comparing a small portion of Europe to an entire continent.
Europe and Africa are both "continents", but not of similar scale. Africa is three times the size with a better climate. It appears to have roughly double the population of Europe.
I'm not sure about Africa having a "better climate." Obviously Europe is cooler, but I'm not sure there's a consensus about what the best temperature is for human thriving. Bugs/disease, growing seasons, specific crops, lots of things are different between the two - not to mention a huge desert. We could even make up a Just So story that says Europeans had to work harder to keep warm in the winter while Africans were encouraged to work less and not overheat. Add in some generations and Europeans are hard workers while Africans are not. Again, it's just a made up story but could mean that cooler weather is actually better.
Africa is a better climate in that the same amount of effort produces more food. Specific crops are not relevant to this question; you want to use whatever is best suited to wherever you happen to be.
The desert is obviously an exception, but most of Africa is not that. Egypt is an exception to the exception of the desert.
Bugs and disease are problems, though much more problems for foreigners attempting to live in Africa than they are for Africans living in Africa. The Africans are more inhibited by the megafauna, which funnily enough is not so much of a problem for incoming foreigners.
But neither microfauna nor macrofauna factor into the climate. The African climate is good. There are some non-climatic environmental problems.
I'm getting it from Angus Maddison (surprisingly not a Scottish dating website for cheating spouses). That's the only data set I could find on the topic. So to the extent that the data aren't credible, I'm not sure I have much of an alternative.
I'm looking at Angus Maddison's final data release (2010), and I see that the figure for "Africa" is based on estimates† for the following locations:
Algeria, Egypt, Libya, Morocco, Tunisia.
Mentioned as being part of Africa, but with no data present at all, are the following:
Angola, Benin, Botswana, Burkina Faso, Burundi, Cameroon, Cape Verde, Central African Republic, Chad, Comoro Islands, Congo 'Brazzaville', Ivory Coast, Djibouti, Equatorial Guinea, Eritrea, Ethiopia, Gabon, Gambia, Ghana, Guinea, Guinea Bissau, Kenya, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mauritius, Mozambique, Namibia, Niger, Nigeria, Rwanda, Sao Tome and Principe, Senegal, the Seychelles, Sierra Leone, Somalia, South Africa, Sudan, Swaziland, Tanzania, Togo, Uganda, Zaire, Zambia, Zimbabwe, "3 small Afr.".
(Omission of Madagascar doesn't really matter since it was unpopulated in the year 1. The same cannot be said of the rest of the locations.)
The definition of "Africa" used for the 1 AD estimate is a close match to what a Roman in 1 AD would have understood by the word, but it is essentially unrelated to the use of the same word in modern English. There should not be an estimate for "Africa" for this year in the data sheet at all.
† Actually, something else is clearly being taken into consideration, since there are only two regional estimates for the year 1000 (Morocco and Egypt), but the estimate for "Africa" that year is lower than either. Still, we can see that the data overwhelmingly doesn't exist and the pan-African estimate won't pass a laugh test.
Sure, so then let's just modify the statement to apply to the Maghreb. They started at parity with France in 1AD. Today they're vastly dissimilar. The geography hasn't changed.
What happened?
There is one way in which the geography has changed - Egypt in ancient times was powerful because of its immense agricultural productivity (still valid) and its vast stores of gold (long since mined out; possibly these were already gone by the year 1).
For a more serious answer to your question, I would guess that mostly what happened is that population density in France rose. The Mediterranean shore was settled early on by highly commercialized people. This gave it a head start; when you look at 1 AD you're not seeing a steady state. The Maghreb is closer to its full potential than France is. (You can read Julius Caesar, a few decades prior, describing the social and political structure of Gaul - it is not at all what we would consider mature.)
I would also agree that different institutional histories (including the present day) play a very important role. But France is better territory than the Maghreb is, so quite a bit of divergence is to be expected based on the geography.
To be fair, I believe that over-grazing has made North Africa a good deal less fertile than it was in Roman times. So the geography has in fact changed, albeit probably not enough to account for all of the divergence.
Nobody sane claims that climate is totally irrelevant, there is a reason why the population of Antarctica is so low compared to other continents.
Still, geography/climate can be overcome.
You can have a big city in the Mojave desert. (Las Vegas)
Or a smallish group of humid tropical islands previously featuring some fishing and agriculture can become one of the leading high tech nations. (Taiwan)
Yeah but that isn’t their argument. Their argument is that literally only institutions matter.
I think we have to get specific about what it means to "matter". I'd defend the claim that our social environment (of which institutions are a part) can overpower any geographic advantage or detriment. For any place on Earth, the meaning of geography is subject to a veto. If the need is great enough, humans will make it work.
For many places, no such social environment exists, so geography carries the day. By way of example, offshore oil rigs cost hundreds of millions, if not billions, to build. But we could, in theory, deliberately build them in lots of places that we know lack oil. No one does this, because it's a huge waste of money. That's not because the geography prevents this - the oil-lacking places aren't less hospitable than the oil-rich places - it's because there's no good economic reason to build an oil rig that doesn't produce oil.
So geography matters if, and only if, our institutions (I'd say social environment, but whatever) decide not to overpower the effects of geography.
> there is a reason why the population of Antarctica is so low compared to other continents.
The climate is a major factor there, but institutions are a comparable one: https://en.wikipedia.org/wiki/Antarctic_Treaty_System
I liked Broadberry's critique of "Why Nations Fail"
https://entitledtoanopinion.wordpress.com/2017/09/04/stephen-broadberrys-accounting-for-the-great-divergence/
I also enjoyed a number of @pseudoerasmus' tweets on their other work like "The Narrow Corridor", but he locked his Twitter account.
Showing the causal effect of colonialism based on tropical diseases (as if that couldn't have an independent effect) rather than using non-colonized countries like Ethiopia & Thailand as controls always struck me as laughable.
Here's part of my review of "Why Nations Fail" from 2012:
To understand Acemoglu’s professional popularity, you have to grasp how awkward the major features of global economic reality are to careerist economists. If you look naively around the world, you might get the impression that, say, Chinese territories such as Taiwan, Singapore, and Hong Kong have been economically dynamic because they have a lot of Chinese people in them. Moreover, the Overseas Chinese control much of business in Southeastern Asia, so we might assume that the Chinese tend to have a lot on the ball wherever they go.
The epochal conclusion that Deng Xiaoping, urged on by Singapore’s Lee Kuan Yew, drew from this in the late 1970s was that if all the Chinese folks in the world were getting rich except the Maoist Chinese, the problem must lie more in the “Maoist” than in the “Chinese” part. And, indeed, once liberated from Mao’s dogmas and whims, the Mainland Chinese responded with one of history’s greatest economic surges.
To an economist looking for invitations to conferences, however, the danger of adopting the Lee-Deng perspective is its flip side: Some other peoples, such as black Africans, New World Indians, and Pacific Islanders, have tended to lag notably behind Northeast Asians and Europeans, whether at home or abroad, and under all sorts of ideologies and institutions.
Acemoglu’s contribution was to come up with a regression analysis that, he claimed, showed that Third World poverty was the fault of those all-purpose bad guys, European imperialists. In colonies where early Europeans settlers faced low risks of dying from tropical diseases (such as Massachusetts), they set up good “inclusive” institutions. But in colonies where white men died like flies (such as Nigeria), they set up bad “extractive” institutions.
Institutions are (practically) everything, you see. If, say, the Central African Republic is poor, it’s not because it’s a republic in Central Africa (or because poverty is the default condition of humanity), but because it has extractive institutions. And that’s because Europeans didn’t set up inclusive institutions for the Central Africanese.
If Australia or New Zealand or Canada are richer than the Central African Republic, it’s not because Australia or New Zealand or Canada are full of Europeans, it’s because the Europeans hogged the inclusive institutions for the places they colonized. Or something. Acemoglu wrote:
"These results suggest that Africa is poorer than the rest of the world not because of pure geographic or cultural factors, but because of worse institutions."
According to Acemoglu, that’s pretty much all you need to know.
The other problem with the `pure HBD' thesis is that it's fatalist. Development economists would like to believe (as would I) that e.g. Africa too can be rich, if only they can figure out the right set of policies. They would also like to believe that insights from development economics actually effect how well countries develop. Of course, what we want to be true does not need to actually be true, but it should not surprise anyone that development economists don't like a thesis which says, basically, `your whole field is useless, HBD predetermines everything.' (Or maybe, `your whole field is 99% useless, HBD plus not making obvious mistakes like communism predetermines everything').
Right. A pure HBD-only theory would be as implausible as a pure institutions-only theory.
Sure, but at least HBD is a fundamental, necessary-but-insufficient factor. Institutions are not even fundamental - they almost certainly depend on inherent human characteristics in the first place.
I dunno. Institutions seem pretty important, as is geography, human capital, culture, etc.
I'm saying that institutions are downstream of genetics/culture. Haiti are probably never going to have "good instiutions" regardless of who they elect. Same for 'human capital'. You cannot recreate the 'nordic model' in a country full of people very unlike nordic people.
Could Haiti at least hope to have institutions as good as Jamaica? Or the Bahamas?
Except that quick and drastic changes in institutions happen that obviously outpace genetics and culture - both China and India have rapidly changed their institutions to market institutions and benefited enormously from it. This doesn't mean genetics and culture aren't upstream of institutions - they probably aren't deterministic to any great degree
One of the CRUCIAL insights from HBD in terms of Africa is that the single most important thing that can be done for a brighter African future is to stop every African with half a brain from leaving Africa for (mainly) the west, because intelligence is a vital but strictly limited supply and one that Africa can't afford to export. But the political left, the people most concerned with African development, not to mention Africans themselves, by and large perversely *support* African brain drain, because they love the thought of Africans getting to have good lives in nice countries and think that the remaining african population can do anything the smart ones can if there's just enough 'investment' in 'education'. It's all very sad, really. And no realistic amount of remittances can ever make up for a lack of brain power.
Of course, if you REALLY wanted to turn up the dial of on African economic growth, you would be looking for ways of getting smarter Africans to not only stay in Africa but also to have more kids than the less smart ones. But that's obviously beyond the pale to even suggest.
"If the people who care about African development the most, as well as African themselves, disagree with your theory, then that’s pretty strong evidence that it’s flawed."
Do they disagree? "Brain drain" is a well known term, and as far as I know, it's uncontroversial.
Its undesirability is controversial. How many governments actually try to prevent it, eg by imposing emigration controls or an exit tax? By revealed preference most countries are not upset about so called brain drain.
The existence of the term is uncontroversial, sure. Not sure what that proves.
That doesn't necessarily prove that countries think it's fine; they might strongly dislike it, but think that they can't realistically stop it, and/or that admitting that they need to forcibly stop their brightest and best from leaving would humiliate them on the international stage (the Berlin Wall was a huge embarrassment for the Soviet Union, by way of comparison).
Does the other side of the argument hold? That if I wanted to enrich the West, my evil plan to impoverish Africans should be to import the smartest and most talented, because that would make my country smarter and their country weaker?
Let's say I wanted to put America First and improve America without any concern for other countries. Would I want to continue (or expand) our current immigration policy?
Or would I also support stopping Africans from migrating to America?
Impoverishing Africans does not automatically enrich the West. Since Africans are on average far less educated and far less successful than Americans, unless you're very selective about who gets here, the average immigrant will be successful by African standards but unsuccessful by American standards. That's before considering the many other reasons that drag immigrants down, like the language barrier, cultural differences, lack of recognition of foreign credentials, etc.
This kinda seems like "heads-I-win, tails-you-lose". Taking in Africans both hurts the African countries they're leaving, and the Western nations they're joining. So one might ask the question of why they want to leave, and why anyone would want them to come?
I'm also not sure it meshes with the actual data. 61% of Nigerian Americans have a bachelors, compared with 25% of other Americans. Nigerian Americans on average make more than the national average. So I can understand someone saying that those Africans would otherwise be raising the quality of life in Africa, but adding on the further claim that they are actually pulling down America makes the whole thing seem like it's just motivated reasoning.
That we're working backward from the conclusion that Africans ought not to be in America, and - surprise! - we discover that this is the only conclusion that you can reach from any political starting point, other than one of pure misanthropy.
<i>This kinda seems like "heads-I-win, tails-you-lose". Taking in Africans both hurts the African countries they're leaving, and the Western nations they're joining. So one might ask the question of why they want to leave, and why anyone would want them to come?</i>
They want to leave because, whilst mass migration isn't good for the countries they're leaving behind or the countries they're moving into, it is generally good for the individual migrants. And people want them to come out of a combination of racial guilt, sentimentality about people "following their dreams" and "trying to build a better life", a vague sense that everywhere outside the west is a complete nightmare so rejecting an immigration application is tantamount to a death sentence, and utopian ideological presumptions about how everyone's just a western liberal at heart so you can radically alter the demographics of a given country without also altering its politics and culture.
<i>I'm also not sure it meshes with the actual data. 61% of Nigerian Americans have a bachelors, compared with 25% of other Americans. Nigerian Americans on average make more than the national average. So I can understand someone saying that those Africans would otherwise be raising the quality of life in Africa, but adding on the further claim that they are actually pulling down America makes the whole thing seem like it's just motivated reasoning.</i>
That's true of Nigerian-Americans, but not necessarily true of other groups, or other countries, e.g., https://www.reddit.com/r/europe/comments/m9uww5/net_contribution_of_different_nationalities_in/
"So one might ask the question of why they want to leave, and why anyone would want them to come?"
Why they want to leave is easy: their quality of life is vastly better in the West than in their home countries. Why anyone would want them to come is more complicated. Partly it's white guilt, partly it's sympathy for the plight of the world's poor, partly it's genuine appreciation of cultural diversity, partly big business likes them because unskilled immigrants can be paid lower wages and a diverse workforce with language and cultural barriers is harder to unionize.
"I'm also not sure it meshes with the actual data. 61% of Nigerian Americans have a bachelors, compared with 25% of other Americans. "
And that's because we are very selective about which Nigerian Americans get there. We're not very selective about which Mexicans get there, and consequently Mexicans form a racial underclass, causing a variety of social, economic, and political problems. If you want to welcome in more Nigerians in exchange for fewer Mexicans, I'm all for it.
Where has this HBD acronym popped up from? Suddenly everyone is discussing HBD, as if it should be obvious what it stands for!
I'm guessing D may stand for "Development", but a web search only turned up a company called Henry Boot Development, which doesn't sound very relevant.
I don’t know exactly. From context though it’s genetic. So probably human biological development.
It is short for Human Bio-Diversity
It is short for Human Bio Diversity (as 'the hot taker general' said).
The important bit, however, is that the diversity making up HBD includes some items that are more than cosmetic: things such as intelligence.
If you believe that intelligence is (a) at least partly genetic, and (b) not evenly distributed between whites/Asians/black (as many/most HBD folks do) then one fundamental challenge for Africa is that Africans, on average, aren't as smart as, say, the folks whose ancestors lived in the Nordic countries.
And by enough to matter.
One implication is that countries full of (and run by) Africans *can't* be as competently run as northern European countries for the same reason that companies that don't have enough smart people will be run poorly compared to companies with many more smart people. Decisions will, on average, be worse.
Repeat as desired for *other* traits, possibly including the ability to construct high trust societies.
This is fatalistic because no one knows how to increase intelligence (education, yes, up to a point ... but not intelligence) so this implies that there isn't much to be done. "Africa wins again," as the saying goes.
Does this help?
"Human biodiversity". It's a code phrase used to talk about genetic determinants of e.g. intelligence without constantly being accused of racism. The term has been around a while, and has been popular among a subset of the SSC/ACX commentariat since before Scott moved his blog to Substack; I think you're just suffering from the Baader-Meinhof Effect.
I devised the term "human biodiversity" in 1998, then immediately discovered that anthropologist Jonathan Marks had published a book of that title in 1995. It covers ancestral differences, sex differences, and other differences that might be at least part biological, such as sexual orientation and handedness. It also includes the impact of chemicals on humans such as lead and steroids (1998 was a big year for the topic of steroids in baseball).
It's code for "race eugenics", and makes no sense for the simple reason that melanin means diddly as far as biological diversity goes.
Most genetic diversity is in Africa, so if population genetics were all that important then you'd expect the continent to contain both the richest and poorest countries on earth.
Good point, this is why I don't believe in genes for hair colour. If population genetics determined the amount of natural blondes and redheads in a population, you'd expect Africa to contain the countries with both the highest and lowest numbers.
This merits no serious response except to point you in the direction of polygenic traits. The unintended hair dye/IQ testing analogy is appreciated, however.
>no serious response except to point you in the direction of polygenic traits
Your definitions of both "serious" and "response" are extraordinarily broad.
It is not fatalist, if you follow the obvious conclusion of these premises, i.e. eugenics. But given that even admitting that those premises just might be plausible already puts your Hitler quotient at like 90%, going the whole hog and claiming that the only real solution is to breed better Africans at scale is in a different city from where the Overton window is.
"the only real solution" Hmm... Are there other options from, e.g. the techniques of fault-tolerant computing and error-correcting codes? Add redundancy to the system and use it to try to reduce noise? Conceptually the simplest choice is to have three independent decision makers for each decision and take the majority result.
Ensuring decisionmaker independence is one of those hard problems that (HBD claims) is downstream from national genetic fortune, so seems to be a chicken and egg problem.
Anyways, I don't expect a viable political solution to be developed any time soon, regardless of what premises are actually correct. Progress in technology seems to be much faster than that in politics/philosophy/etc these days, so until that changes, the application of cutting edge tech is by far the dominant factor in determining the shape of the future. Things may end up going very well or very badly, but in most cases the current differences between the first and the third world would likely end up being completely irrelevant.
Agreed that decisionmaker independence is difficult. I don't know whether it is downstream from HBD or not, but "groupthink" has sunk many a decisionmaking group, even in many successfully industrialized nations, so independence is indeed a hard problem.
Re: "the application of cutting edge tech is by far the dominant factor in determining the shape of the future." Yes, this is my expectation as well. For good or for ill, I expect technological advances and their effects to be more important than anything else.
I find Mancur Olson's classic work 'The Rise and Decline of Nations' to be valuable here, even though he is focused upon economic rather than primarily social issues.
FWIW, I found the book quite convincing. Obviously it's long on narrative and short on proof, but how else could it possibly be? This is not a subject amenable to rigorous mathematical demonstrations.
I can't help but notice that many of the loudest and most passionate critics are coming at the book from a right-wing, and occasionally straightforwardly racist, point of view. You have to suspect that they're looking for reasons to find fault with a thesis that undermines their own worldview.
Then again, the thesis is flattering to my own politics so I might well be committing the same error in reverse. Not sure how to tell.
Part of the problem, in judging the book, is probably that there's too much agreement. Everyone knows that good political institutions with minimal corruption will help a nation succeed. So the Why Nations Fail thesis boils down to "this obviously-important factor is even more important than people give it credit for". It's pretty hard to test the difference between "moderately important factor" and "very important factor".
Political institutions are obviously significant, but then so is, say, geography. That, say, Belgium has more soil, climate, and more topography more conducive to human thriving than, say, Mali seems obvious. That Acemoglu and Robinson are reluctant to admit that even geography matters much is not confidence-inducing in their thesis, which tends in their presentation toward Popperian unfalsifiability.
It is however not sufficient. If it were, then you could move people from Bali to Belgium and they would succeed.
And here we have a famous white supremacist, a man who has his own Wikipedia page about his racism.
I hope you understand why I'm suspicious of your motives.
Anyway, I'm sure they'd tell you about nations that succeeded with terrible geography or failed with great geography. And they'd have a a point.
But yes, their thesis is very difficult to falsify. Much like the rest of the field. This isn't physics, and you can't do controlled experiments with countries. You just have to get used to it; I promise that your own preferred explanations have the same problem.
>I hope you understand why I'm suspicious of your motives.
Do we get to be suspicious of the political left who hate white people? https://ideasanddata.wordpress.com/2020/06/03/american-racism-and-the-anti-white-left/
Or is hating white people okay because they deserve it?
You're basically saying that "your position is wrong because it's bad" - you're not interested in good faith discussion, you want to show people down with slurs.
>Anyway, I'm sure they'd tell you about nations that succeeded with terrible geography or failed with great geography. And they'd have a a point.
Europeans and North-East Asians have managed to thrive on average regardless of geography.
While this may be accurate, I regretfully have no confidence in wikipedia on sensitive political topics
I also notice on climate change where the social cost of carbon was previously rated at a median $50 per tonne they now don't deign to refer to any number under $300 if I recall right
>I can't help but notice that many of the loudest and most passionate critics are coming at the book from a right-wing, and occasionally straightforwardly racist, point of view. You have to suspect that they're looking for reasons to find fault with a thesis that undermines their own worldview.
No, it's because his thesis doesn't work.
And stop using propaganda terms like "racist". If race differences exist, they exist and should be talked about. You calling them "racist" is just shouting down people who offend your ideological sensibilities.
The people you call "racists" have made better predictions over the past 50 years and empirical reality is more consistent with their worldview than it is yours. The "anti-racists" were convinced post-colonial Africa would blossom, the "racists" knew this is was silly. And when this prediction turned out to be dead wrong, we get a bunch of dataphobic just so stories to rationalize the failure.
>So the Why Nations Fail thesis boils down to "this obviously-important factor is even more important than people give it credit for". It's pretty hard to test the difference between "moderately important factor" and "very important factor".
No, the problem is that it treats institutions as a completely independent factor - they're not. They depend crucially on people. Haiti cannot "introduce" the Nordic Model, regardless of who they elect to power. If you want the "Nordic Model" you need people similar to Nordic people, because that's where this model comes from and why it works.
If you think that racist is merely a propaganda term, then you aren't worth talking to.
I'm not normally one to shy away from an argument. Normally I'd have a lot to say against the idea that racists have any kind of positive track record when it comes to predicting and understanding the world. But bluntly, it would be wasted on you.
Singapore seems like another counter example although it is partially Democratic.
I don't see what's undemocratic about Singapore. It's true that one party has continuously been in control since 1959, but one party has been in control of Chicago since 1931.
Alright, Chicago isn't the best example of a functioning democracy, but still...
possibly the bit where opposition politicians spontaneously but inevitably get sued into bankruptcy and/or jail, or where constituencies which vote the `wrong' way mysteriously but inevitably get penalized in the allocation of public resources.
If Chicago was its own country I'd suggest we wouldn't consider it a democracy either.
I'd much impressed with Singapore, but I also realize that if I'd lived there, the government would sue me into bankruptcy.
This is blatantly polemical in a way that immediately biased me against the reviewer's position. They claim to Steelman, but then use analogies like:
> *" if you are willing to accept the underlying premise that" [...] "are determined by the LORD. "*
Nice review.
Focusing on political institutions inside a "failed nation" also conveniently ignores outside forces like say, colonialism (pre WW1) or neocolonialism (post WW2) or the British attempt to take over the Suez Canal or the various Arab Israeli wars subsequent to the fiat formation of Israel after World War 2, color revolutions, "freedom loving insurgents" that later become terrorist groups a la Syria, or the creation of the failed status of Libya thanks to outright Western warfare, etc etc.
You say "outside forces", but you only mention what the West did. How about the subjugation of eastern Europe by the Soviets, the communist terrorism sponsored by the USSR and China all around the world, the many invasions of non-communist countries by their communist neighbors (South Korea, South Vietnam), the Chinese invasion of Vietnam, or the Soviet invasion of Afghanistan?
And by the way, a French company built the Suez Canal. It was the Egyptians who took it over.
Eastern Europe was subjugated by the Soviets, correct, but it was because they were active participants in WW2 against the USSR under SS guise. Or perhaps you don't know that there were all manner of SS battalions from various Eastern European ethnicities?
Communist terrorism - not really sure what this is. Did Chinese or Russian Communists hijack airliners and fly them into buildings? LOL
Chinese invasion of Vietnam - huh. The two had a war - I'd like to see some evidence of an actual invasion.
Afghanistan: The Russians were invited in by the legitimate government of Afghanistan at the time. The mujahideen were the White Helmets of Reagan's era.
Ditto the Chinese in Korea - let's not forget who was the actual government before 1950 in North Korea. Korea was divided after Japanese eviction into 2 zones - which you do know, right?
The USSR and Communist China aren't saints by any means, but the notion that either sponsored terrorism is nonsense.
As for Suez: sure, the French built it but who owned the other half of the Suez company?
Oh right, the ruler of Egypt. And how did Egypt come to control the Suez canal?
Because the Brits, French etc objected to Nasser nationalizing it but the US said it was ok. LOL.
Seriously, the whole Eastern Europe? As I recall my history lessons Poland was a western ally. The same goes for Czechs, and parts of Jugoslavia.
Poland was divvied up between Germany and the USSR in the opening stages of the conflict. The Poles say there weren't "Polish nationals" in the Waffen-SS, but there was a Galician regiment - and Galicia was part of Poland prior to WW2. It was only after WW2 that Poland was given the corridor linking it to the Baltic Sea as well as bits of Eastern Germany, and gave up Galicia (modern day Lvov and Ivano Frenkel) to Ukraine.
There were also Estonian, Latvian, Hungarian, Finnish, Romanian and Ukrainian Waffen SS "volunteer" units. But to be fair, there were also Belgian, Swedish and Norwegian Waffen SS outfits but I don't think any of them actually served in the Eastern Front: https://en.wikipedia.org/wiki/Waffen-SS_foreign_volunteers_and_conscripts
Yugoslavia: there were Serbian and Croatian Waffen SS.
Estonia, Latvia and Ukraine all celebrate their Waffen SS "freedom fighters" today.
Czechs, Slovaks - hard to say because Czechoslovakia was created out of thin air after the dissolution of the Austro-Hungarian empire. Did the people in what is the Czech Republic, Slovakia or Slovenia identify as Czech, Slovak or Slovene nationally back then? I have no idea and very possibly they didn't either.
Now take all of the above Eastern European nations (place on a map) that absolutely did have Waffen-SS "volunteers", mix in 27 million dead Soviets (not all Russians BTW), and I can't say I am terribly surprised that the USSR wanted to be sure that there would not be any more problems from Eastern Europe.
Especially since there was open warfare between Ukrainian freedom fighters and the USSR (and Poland) for several years after WW2 - which is now acknowledged as having been CIA funded.
I see. So because there were some traitors, you need to subjugate the whole nations, which were earlier victims of Nazizm, and actively fought against Nazizm. Yes, got the logic. Besides, 27 million soviets were in almost half Ukrainians and Belorussians and other nations (which is obvious if you look at the map). So no, none of this makes a good argument. And let us not forget what you yourself mentioned: Russia and Germany were allies before 1941. In fact it was Soviet Russia which provided Germany with resources to build their military might.
No, what I am saying is that it is understandable that a nation that just lost 27 million people to a war with Nazi Germany, which in turn was aided and abetted materially by significant numbers of Eastern European soldiers, would want a security zone over said Eastern European and German populations.
After all, it isn't like the West didn't occupy Germany as well, and Japan.
"Besides, 27 million soviets were in almost half Ukrainians and Belorussians and other nations (which is obvious if you look at the map). "
Other nations - you mean then or now? They weren't nations then. They weren't nations before then. They were all under the Russian tsars, which in turn were replaced by the Soviets.
As for half the losses being "non Russian" - that's the Western line. From the Russian perspective, being in Russia makes you Russian whether you are Buryat, Chechen, or whatever much as being in Russia prior to 1991 meant you were Russian whether you were Ukrainian, Belorussian or whatever.
"And let us not forget what you yourself mentioned: Russia and Germany were allies before 1941. In fact it was Soviet Russia which provided Germany with resources to build their military might."
Germany had lots of friends before 1941. They included the United States and Britain. Russia sold stuff to Germany - and bought stuff from Germany just as Germany bought and sold stuff with the US, UK, France etc. Not the least bit clear what your supposedly point is.
In fact, the single largest installation of IBM's new card based computing systems was ... Germany. It is very arguably likely that the reason the Mustached One was so easily able to ferret out the otherwise fairly well intermixed Jews in the German population was use of this compute capability. It was also predominantly US capital which financed the industrial renaissance from which the Mustached One benefited mightily vs the Russian energy which you reference.
But if we're going to talk history - Poland signed non-aggression pacts with both the USSR and Germany; the German one being signed by the Mustached One who came into office in 1934. Oops.
I'm from Estonia; our understanding of the Estonian men voluntarily joining SS was that Soviet threat was felt to be the worst of all, and joining the SS was at the time the only available option to avoid it. The men joining the SS didn't care at all about the German agenda, only about their own (which is kind of selfish, yet the situation was really awful). The plan was to drive out the Soviets, then hope the Germans get crushed by someone else leaving us as an independent country. Anyway, I don't think we should be proud of "our own SS-division".
Of course, the Soviets would have swallowed these countries anyway, had they fought back or not. The plan was already there before any fight.
What you are saying may well be true for some. It does seem unlikely that none of the Estonia Waffen SS group were pro-Nazi as opposed to anti-Soviet just because there is wide variation in beliefs among any large population of people.
But ultimately, if Estonians fought and killed Soviet soldiers - that's what matters. There is no way to tell the sheep from the wolves especially once blood was spilled. And even if the plan you outlined above was envisioned - there are consequences to failing in plans.
To be clear: Russia made the right decision in letting the Eastern European/Baltic countries go their own way. The cost to Russia was ruinous and the benefit - security or otherwise - clearly negative.
>Now take all of the above Eastern European nations (place on a map) that absolutely did have Waffen-SS "volunteers", mix in 27 million dead Soviets (not all Russians BTW), and I can't say I am terribly surprised that the USSR wanted to be sure that there would not be any more problems from Eastern Europe.
Okay, why doesn't this cut both ways? Why aren't you sympathetic to the eastern european victims of soviet oppression that surely motivated many of them in the first place?
Sympathy don't mean squat.
The Soviets won the war. The eastern europeans mostly did not support the Nazis, but it is pretty hard to tell the sheep from the wolves. And it isn't like the USSR didn't spend enormous amounts of treasure building up those nations after WW2 despite the economic warfare from the West.
The reason the USSR collapsed is precisely because of the massive ongoing subsidies to support those Eastern European nations - so it wasn't a plunder and loot situation.
So what should I be sympathetic to? That they weren't "Free and democratic" but were educated, fed, infrastructure built up and secure at the literal expense of a devastated Russia?
I have no issues with these nations getting their "freedom". The problem is that the result for the majority of them has been highly negative. Populations literally declining, GDP growth not impressive if not outright sad, etc etc.
https://www.macrotrends.net/countries/EST/estonia/population - 16% decline from 1991 to present
https://www.macrotrends.net/countries/LVA/latvia/population - 32% decline from 1991 to present
https://www.macrotrends.net/countries/LTU/lithuania/population - 28% decline from 1991 to present
https://www.macrotrends.net/countries/UKR/ukraine/population - 16% decline from 1991 to 2021
Yes, these people mostly didn't die but fled to the West - but the consequence is a hollowing out of all of these nations as young people left for the EU and so forth and the old and poor are left behind.
Poland, for example, went from a ship building, industrial nation to what do they actually do now? They don't build ships - Lech Walesa's Gdansk shipyard exists still but employs a tiny fraction of workers vs. what it used to. Poland is literally buying tanks and AFVs/IFVs from South Korea LOL. Poland's population didn't fall but it is literally identical to what it was in 1991 - 30+ years of zero population growth.
East Germany, in turn, has not prospered in the least since it reunited with West Germany. There are enormous disparities between East and West even despite the trillion or so euros spent to fix the situation.
Romania, Hungary - both Estonia scale population declines. I am not going to look at every single Eastern European country but the trend is pretty damn clear.
That's not true. The USSR had annexed the Baltic countries before WWII.
If you mean that the Baltics were independent for a year or 2 after they rebelled against their pre-existing Russian Tsarist government in 1917, then were retaken by the Bolsheviks as being "annexation", that's your interpretation.
How many years of Baltic independence was there from say, 1800 to 1991?
2? 5?
I fully grant you that the Baltics are a separate ethnicity with different languages, and even that there have been Baltic nations such as the Polish Lithuanian empire, but the notion that Russian then Soviet dominance over them is improper is silly given the Polish Lithuanian empire's dominance over Russians before that.
The argument was that Eastern Europe was occupied by Russian because they fought on the side of nazis is simply wrong.
They were independent from 1918-1940, that's about 20+, not 2 years.
And why do you put the time frame from 1800-1991? Why not from year 100AD till 1000AD? Any ideas?
Parts of Eastern Europe were independent after WW1 because they were the bits of the Austro Hungarian empire. But other parts were part of Russia - and a number of them including the Baltics were literally part of Russia except for short periods of rebellions that were crushed by the Bolsheviks.
As for 1800-1991 - I chose those that's when the Russian empire absorbed them. As I also clearly noted - there were earlier periods where Russia was under Polish-Lithuanian thumbs.
If you want to look at 100 to 1000 AD - none of these regions bore the slightest resemblence to what they are today. Among the more prominent examples: the Baltic Crusades occurred in the 1100s and later - Swedes to Finns to Germans to Danes conquering these regions under the banner of Christianity.
The point is that any single European ethnic viewpoint is never going to be trustworthy because the entire setup is a ball of worms - and this includes Russian viewpoints. And like all balls of worms - you can find any justification for any possible position you want but ultimately, it devolves to who can make theirs stick.
I think the subjugation part refers to Hungary 1956, Czechoslovakia 1968, etc., not the WW2 aftermath. (Which, required little subjugation, as the Nazis and their allies were hated and discredited, and the people tired of war.)
(Also, Nazis essentially set out to ethnically cleanse the entire Poland, and the entire occupation period was one of constant civil war. If you look for Nazi collaboration there, you may as well look for it among the Jews, it's pretty much the same level of systemic impossibility and absurdity.)
Hungary 1956 and Czechoslovakia 1968 are definitely examples of subjugation, but I was also talking about the WW2 aftermath. Eastern Europe didn't spontaneously choose communist governments in free and fair elections. Here's what Stalin did in Poland to ensure he could colonize it: https://en.wikipedia.org/wiki/Warsaw_Uprising
"While approaching the eastern suburbs of the city, the Red Army halted combat operations, enabling the Germans to regroup and defeat the Polish resistance and to destroy the city in retaliation. [...] Recent scholarship since the fall of the Soviet Union, combined with eye witness accounts have called into question motives of Russia and suggest their lack of support for the Warsaw Uprising represented Soviet ambitions in Eastern Europe. The Red Army did not reinforce resistance fighters or provide air support. Recently declassified documents show Joseph Stalin tactically halted his forces to let the operation fail and allow the Polish resistance to be crushed.[19]"
>Eastern Europe didn't spontaneously choose communist governments in free and fair elections.
Obviously, but it didn't actively reject them either. (And when it did, the Soviets initially stepped aside - in Austria, Yugoslavia, Poland. Until Hungary.)
Your argument seems to be that USSR acted strategically and did not implement liberal democracy in the territories it controlled. Which, true, but essentially meaningless, and does not qualify as "subjugation" under any meaningful sense of the term.)
Agreed, those were subjugation. How much of those rebellions were organic vs. CIA fueled? Did the Hungarian and/or Czechoslovakian populations rise up en masse to fight the Soviet occupiers?
According to Wiki: 2500 Hungarians and 700 Soviet soldiers died in the 1956 repression. Sure doesn't look like a popular uprising to me.
And wiki says 137 Czechs and Slovaks were killed in 1968. Hell that's not even a good quarter in Chicago.
From the numbers: it seems pretty clear that these were not widespread popular rebellions. Or are you accusing the Soviets of being soft for killing only 2500 and 137, respectively?
The Czech Spring was relatively bloodless because the government knew that armed resistance was futile and ordered its citizens not to fight. I don't think this tells us anything about how popular or not the reformist government was.
Popularity but failure to fight does not make for a revolution or indicate deep conviction.
Most revolutions fail but all revolutions that don't fight, fail.
Hungary and Czechoslovakia were popular movements, and you can tell they were popular movements because they did not require force to institute, but did require force to crush.
Compare these numbers with some genuine CIA operation, say 2019 Bolivia (no proof of CIA involvement, I guess, but it fits the type). Most deaths were among the protesters against the coup, but more importantly, there were a total 33 of them. And this is normal, preferring X to Y does not preclude preferring Y to death, your standard for [how much people must be willing to fight an overwhelming violent force until you accept them as genuine] is just outright insane.
2500 and 137 dead doesn't look like much of a popular uprising to me give the literal ~10 million population each.
The American War of Independence saw 20K to 70K killed out of a far smaller population (~2.5 million).
French resistance lost 24K.
Soviet partisan losses were certainly in the 6 digits and maybe 7.
Greek resistance lost 20K.
The list goes on and on. Can't say the above numbers look much like a popular uprising as opposed to a small group, unless you want to stipulate the Soviets had a light hand in suppressing said rebellions. Hungary is closer given the relative population size of Hungary vs. France, but Czechoslovakia definitely does not.
2019 Bolivia wasn't either an outside intervention nor was there mass movement of the military. The deaths were police shooting into crowds for the most part. Not the least bit clear how you can equate that with your own self-professed Soviet crushing of Hungary and Czechoslovakia with tens/hundreds of thousands of soldiers and tanks. Bolivia also wasn't against a foreign power - it was against their own government.
My standard is pretty simple: if the foreign occupier is so odious that they rebelled including force of arms, that is proof of conviction.
A bunch of NED sponsored sign wavers, in contrast, is not proof, nor is an extremist group conducting a military uprising, proof. Shay's rebellion, for example, clearly was not a widespread popular affair.
Nor is your (apparent) assertion that desire is sufficient to characterize a popular uprising. There are very specific legal definitions for rebellion, mutiny, treason and so forth - for a very good reason. For example, the Wiki definitions of rebellion vs. insurrection vs insurgency: "An armed but limited rebellion is an insurrection, and if the established government does not recognize the rebels as belligerents then they are insurgents and the revolt is an insurgency."
Poor review (and comments!). Seems to set out disagreeing with the authors theories and, from there, conclude the book is bad. If you disagree with a thesis and expect scientific evidence in a book intended for a popular audience- of course the book is bad and academic papers are better - but that's not the point of a book like this!
Also doesn't reflect well on ACX or this commenting audience that a similar book, WEIRD, is getting glowing reviews even though it's extremely similar in style just containing different conclusions.
That aside, for those here looking for other great books like Why Nations Fail or WEIRD that making sweeping historical arguments and summarize vast amounts of research without provide bullet-proof data/evidence... worth checking out Escape From Rome. I found it to offer an interpretation of history that transcended and included both WEIRD, GGS, and Why Nations Fail.
Never read weird, but this book was dumb. It’s a fine book if you asked me to have some random smart person write a book about the topic. It is a piece of garbage as “the leading book on economic development by experts on the field”.
I haven't read Why Nations Fail, but one criticism from the review is the lack of quantitative analysis, charts, tables, etc.
I have read WEIRD, and it most definitely doe not lack quantitative analysis, charts, tables, etc.
It's the worst book I've ever read, and I mostly agree with it.
+1 Reading this review was weird, because it seemed like the author had a vendetta against the book and yet was doing a poor job of making it actually sound bad.
And even if they were right, that just leads to the "conclusion: review not worth the candle" issue as they put it. Most people here are never going to read any of the books "reviewed". The point of the contest is to produce interesting essays, not a shopping guide. If you think a book is bad, you shouldn't write about it in the first place, or else use it a springboard to write something better like Scott often does.
On the bright side, one problem with this year's contest is that so many of the reviews have been strong contenders for the top spot, so it's refreshing to have a really terrible review for contrast every once in a while.
The other issue is that AR are not very original. Most of these points were made by Douglass North and coauthors. The question that remains is why is Acemoglu so revered by academic economists. It seems his fame is based on his incredible ability to produce top-5 publications based on shady data or dubious IV strategies.
I agree with the author of the review that the academic papers are much better, but the book is not all that bad if regarded as popular science. The main problem with the book is that "institutions" is an umbrella term for a lot of different stuff, plus that monocausal explanations for something as complex and vague as "desirable development" is likely to seduce you rather than enlighten you (a problem it shares with the WEIRD book).
To break the growth code and avoid the middle-income trap, a country needs three things:
1. Some system to generate a surplus that can be invested
2.Some system that ensures this surplus is not mainly invested in idiotic things
3. Some system that ensures that those who invest in non-idiotic things, can be reasonably confident they will be allowed to benefit from their investments.
...these three things can be achieved/created in several ways, and there are also several ways they can break down. The ways that work is to a varying degree context-dependent, so ways/strategies that worked in one country do not necessarily work somewhere else. The context may also change across time. Also, "system" in this context is a historically derived amalgam of institutions, culture, traditions and ways-of-doing-things that to an unspecifiable-in-advance degree can be influenced by political decision making.
Coincidences and good luck/bad luck also play unspecified, but probably significant, parts. The vikings, which is a historical/cultural export from my part of the world, were deeply impressed by - and likely to follow - a chief that had shown "he was favored by luck", even if he was otherwise not very impressive. Probably because according to Norse mythology, being in luck could be a sign you were favored by the Norns (Nornir), the female supernatural beings that spin the threads of fate not only of humans but also of Gods (Aesir) - thus arguably being more powerful than Gods. Perhaps countries, like Gods and humans, are favored to a different degree by the Norns, spinning the threads of fate on their forever-spinning wheels.
The last paragraph was a digression, but is not that what a comment section is for...
Good Review! To the author: have you read "The Birth of Plenty"? It's currently my favorite 'big idea' macroeconomic history book. Curious what you think about it.
"Each society functions with a set of economic and political rules created and enforced by the state and the citizens collectively. Economic institutions shape economic incentives: the incentives to become educated, to save and invest, to innovate and adopt new technologies, and so on. It is the political process that determines what economic institutions people live under, and it is the political institutions that determine how this process works."
I don't see how that's a definition either. It states what economic institutions do and that they are determined by the political process which are determined by the political institutions. It does not state what institutions are at all!
"To be inclusive, economic institutions must feature secure private property, an unbiased system of law, and a provision of public services that provides a level playing field in which people can exchange and contract; it also must permit the entry of new businesses and allow people to choose their careers. ... such rights must exist for the majority of people in society."
As a couple of other comments have pointed out, Douglass North got there first. In his Nobel lecture, he wrote "if the institutional framework rewards piracy then piratical organizations will come into existence; and if the institutional framework rewards productive activities then organizations – firms – will come into existence to engage in productive activities."
I will have more to say about North on my own Substack soon.
> "To be inclusive, economic institutions must feature secure private property, an unbiased system of law, and a provision of public services that provides a level playing field in which people can exchange and contract; it also must permit the entry of new businesses and allow people to choose their careers. ... such rights must exist for the majority of people in society."
Interesting. I've been reading Amy Chua's World on Fire recently; the message of that book is that institutions matching this description are evil and result in small insular groups controlling 90%+ of the economy.
some people in the comments have asked:
why do A&R insist that institutions are the ur-cause of economic growth? why not "culture geography institutions policy all play a role to varying degrees, with institutions playing a slightly higher role"?
my answer:
i think their framing is a product of the context in which the book was written. during a period when institutions and politics were given very little attention, and development was thought of as a top-down policy project to be implemented by global institutions like the world bank, UN, and IMF. this paternalistic technocratic view which placed very little weight on the internal politics of developing countries themselves was the consensus in the 90s and early 2000s, and to the extent to which it is no longer a consensus is in part due to the immense success of A&R in changing the narrative. i'm almost certain i heard or read acemoglu say this in a podcast or interview, but can't find it now.
I liked that review; I hardly ever read the books reviewed, now I can do so without self-guilt. :D Fine puns and fine links to explore further - oh and about institutions/politics: sure, they must be important, as bad ones can and will screw up badly. But ok-ones do not cause development by default, can't push with a rope. Infrastructure and literacy are fine aims, high taxes and red tape: less so. People's lives in Haiti may be improved fastest by leaving. Only: We won't let them in.
I think you can just strip away all the talk about institutions. The core message, that a powerful minority abuse their power and curtail development because things like the rule of law are against their interests, holds up pretty well imo.
Most of the successful growth stories (South Korea, Singapore) feature authoritative admins who wanted growth and weren't only interested in material wealth and power for themselves. Maybe China is like this too?
Talk about institutions is just a distraction from this core message and doesn't add much imo.
I think you can just strip away all the talk about institutions. The core message, that a powerful minority abuse their power and curtail development because things like the rule of law are against their interests, holds up pretty well imo.
Most of the successful growth stories (South Korea, Singapore) feature authoritative admins who wanted growth and weren't only interested in material wealth and power for themselves. Maybe China is like this too?
Talk about institutions is just a distraction from this core message and doesn't add much imo.
Thank you for crystallising why I was so unimpressed with their book when I read it.
In looking at N dimensional problems, using N-X variables can't work. Think Conic Section or real Flat Land by Abbot.
In looking at population density one variable is the control of enteric diseases (food and water born diseases). The great invention of the toilet and disposal system allowed high population densities in the West, but we lost the nitrogen fertilizer and if we didn't create synthetic fertilizer (ammonia) we would have failed. The East (China, etc.) developed the wok for stir frying, blanching, boiling, or otherwise killing the pathogens on the food from using night soil for fertilizer.
The sanitary engineers have saved more lives that all the doctors in the world, but we can't even see our own culture.
AJR intentionally stymied the career of David Albouy for the accurate criticisms he made of AJR. In https://www.aeaweb.org/articles?id=10.1257/aer.102.6.3059 Albouy he correctly showed that AJR had cherry-picked or fabricated a significant portion of their data, but Acemoglu had already built an entire reputation on that work so pressured colleagues to hamper Albouy's advancement.
https://www.econjobrumors.com/topic/david-albouy-vs-daron-acemoglu/page/6
An admittedly beyond the pale joke that made the rounds in development economy-circles many years ago may none the less be, well, a bit entertaining to re-tell in this forum:
An Asian and an African student both attend the London School of Economics, and become friends. Some years later, the African fellow gets an email from his friend: "Hey, I've become Minister of Transportation in my country. Want to come for a visit?" He does, and at the airport is met by a man diving him cost-free to his friend's house, which turns out to be a large villa in a posh suburb. His host shows him around in all the nice rooms, and he says: "Wow, how could you afford all of this on your salary?" The Asian fellow smiles and takes him to a window at the back of the house. "Tell me what you see". The African fellow says: I see hills, and further away there appears to be a large motorway". The Asian fellow looks at him, smiles and says: "Ten percent". The African fellow leaves, very thoughtful.
Some years later, the Asian fellow gets an email from his friend: "Hey, it was so nice to visit you. Now, I have also become Minister of Transportation. Please come visit me back". The Asian fellow does. At the airport, a big limousine with a private chauffeur meets him, and drives him to a small castle in a large park. The African fellow guides him through room after room filled with paintings of old masters and gilded furniture. "How could you afford all this?" The Asian fellow, astonished, asks. The African fellow smiles, takes him to a window overlooking the large backyard, and asks him what he sees. The Asian fellows stares and says: "Sorry, but I do not see anything except rolling hills and forests". The African fellow looks at him, smiles, and says: "A hundred percent".
Caveat: Asia and Africa are very big places, with lots of different countries in them, and things have changed a lot in most African countries since this joke went the rounds. But it may more generally illustrate that there are differences between corruption which none the less creates development, and totally malign corruption.
I think there is a game theoretic aspect to how any large group functions: neighborhood, society, tribe, nation, supranational group.... This defies any attempt at finding a solution to a question as broad and sweeping as "why do national fail"? Looking at it from that perspective, AR's assertion that "institutions" are what matter hit the mark (which is rather broad) as accurately (and probably more) as any other silver bullet theory, including those based on culture or geography or genetics. Of course, this begs the question of how good (i.e., inclusive) institutions emerge in the first place. It could be because of "culture" (whatever that means). Or, heck, good institutions good beget good institutions until one's geographical luck runs out (e.g., prolonged droughts start to appear).
This review treats WNF as a punching bag, which is fair, but the review itself sheds no more light on the question being asked than AR do.
<i>This review treats WNF as a punching bag, which is fair, but the review itself sheds no more light on the question being asked than AR do.</i>
I don't think that's a reasonable criticism. A bad attempt at explaining something doesn't become good just because the reviewer can't currently think of a better one.
Yeah, that's fair. I shouldn't have concluded with that particular phrasing.
Overall, I am more sanguine about the theories expounded in WNF than the reviewer is. I think AR are right in their identification of institutions as the key determining factor in the fortunes of nations. What's missing from their analysis is how those institutions emerge in the first place, as "institutions" are either man-made or evolve from complex human interactions, and so by definition cannot be the root causes.
As I mentioned earlier, I believe the emergence of institutions of particular types almost defies analysis as there is a game-theoretic dynamic underlying the process. Game theory, beyond the most simple formulations (like 2-person games or zero-sum games), has proven to be basically unsolvable. But this is not the criticism the reviewer levels at WNF. He/she seems to be looking for an alternative silver bullet explanation, as he/she finds "institutions" to be unsatisfactory, and criticizes AR on those grounds. I think that's both unfair and wrong on an empirical level.
Reading this review was weird, because it seemed like the author had a vendetta against the book and yet was doing a poor job of making it actually sound bad.
And even if they were right, that just leads to the "conclusion: review not worth the candle" issue as they put it. Most people here are never going to read any of the books "reviewed". The point of the contest is to produce interesting essays, not a shopping guide. If you think a book is bad, you shouldn't write about it in the first place, or else use it a springboard to write something better like Scott often does.
On the bright side, one problem with this year's contest is that so many of the reviews have been strong contenders for the top spot, so it's refreshing to have a really terrible review for contrast every once in a while.
Why is this an unoptimistic take? Is it that hard to limit how extractive elites are in a country?
It's mentioned a full-on invasion would be required to do so, but can't less dramatic intervention do it if you explicitly target solving expropriation risk for a country you're intervening in?