286 of 349 people found the following review helpful
A single minded (almost overzealous) presentation of an otherwise very good economic theory of prosperity,
This review is from: Why Nations Fail: The Origins of Power, Prosperity, and Poverty (Hardcover)
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`Why Nations Fail' is a book by two eminently qualified economists: Daron Acemoglu, and James Robinson. While they convincingly advance the (not so original) premise that prosperity follows from inclusive political institutions, they make the mistake of pushing it too far to paint a completely black and white picture. Apart from ignoring all other effects on a nation's prosperity, the book is written as if it is a collection of college lectures. As such, it has a tremendous amount of repetition. If you take out the stuff that is unnecessarily repeated, you would reduce the number of pages by half or more.
The biggest glaring omission in the book is the role and the overall importance of education. The book starts with the tale of Nogales: that is `Nogales Arizona' and `Nogales Sonora', in Mexico. I'm sure that you will not be too surprised to learn that Nogales on the North of the border is more prosperous. The differences between the past and the present political institutions of The U.S and of Mexico have a lot to do with the differences in prosperity. But it is not the whole story. Education is another one (and not the only other one either.) There are more opportunities in the U.S. to get better education. More importantly, getting a good education is valued more in the U.S. than in Mexico. The authors may want to believe that this follows from the differences in the political institutions, but it does not. There are countries with "extractive political institutions" where the education is highly valued (like China) and prosperity is increasing by leaps and bounds every decade. To be fair, the authors discuss China but not very carefully.
The authors appear to be absolutely smitten by Britain (more precisely by England.) England certainly deserves a great deal of credit for advancing inclusive political institutions earlier than other nations. But if that was the whole story, you would expect England to be the most prosperous nation in the world in the 21st Century. Even if you exclude the oil rich tin-pot-little-countries, England still lags far behind Norway, Switzerland, Sweden, Denmark, Netherlands, Germany, and yes, even the U.S. The "Glorious Revolution" (1688) in England (which must have been mentioned in a hundred different contexts) should have put England in the driving seat. Well it did, but only for a while. By the time the 20th Century started, Western Europe and the United States had already surpassed England in prosperity, despite the fact that no other country had as much economic support from its "colonies" of which resources it devoured. None of the Western European countries had an equivalent of the "Glorious Revolution", because that is not a key ingredient to prosperity.
I will close by commenting on the example of Egypt. Egypt is a poor country today, and it has always been a poor country for the last two Millennia. The authors blame Egypt's poverty on the iron-fisted rule of the Ottoman Empire with "extractive political institutions". Then in the 19th Century, Egypt had the "good" fortune of being occupied by Britain with the most advanced form of "inclusive political institutions" at that time. That did not change things one iota in Egypt. In fact Egypt became even poorer. If inclusive political institutions were all there was to achieving prosperity, Egypt would be in great shape today. Yet these inclusive institutions never took root in Egypt despite the British presence. (They still don't exist today.) An even more striking example (than Egypt) is India. Until its independence from Britain in 1945, India was extremely poor, even poorer than Egypt, despite being fully controlled by the British for two centuries. Today India (unlike Egypt) has one of fastest growing economies in the world. Coincidently, it so happens that India is ranked #1 in the world in terms of how important its people perceive education. Do you know how many pages the authors devote discussing India (with 20% of the world population)? No, I won't tell you, buy the book and read it if you want to find out.
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Showing 1-10 of 63 posts in this discussion
Initial post: Feb 23, 2012 11:09:34 PM PST
Brian J. Sullivan says:
This reviewer did not understand the book. The reason Egypt and India did not prosper under Britain is that Britain did not extend her inclusive institutions to most of her colonies. In places like America and Australia, the inclusive institutions were developed and led to prosperity.
In reply to an earlier post on Feb 24, 2012 9:52:39 AM PST
Amazon Customer says:
And egypt has been fairly prosperous at points during the last two millenia. to say otherwise is kind of ridiculous
In reply to an earlier post on Feb 24, 2012 4:10:22 PM PST
Last edited by the author on Feb 24, 2012 7:15:20 PM PST
The last time Egypt was prosperous was 2100 years ago. The prosperity peaked after Alexander the Great 2300 years ago, and then it declined gradually but steadily. Egypt was never prosperous after the Roman conquest more than 2000 years ago. Egypt became part of the Roman Empire, Byzantine Empire, Arab Empire, Memluk Sultanate, Ottoman Empire, and finally The British Empire. None of those periods were prosperous. There were no inclusive political institutions under any of these so called "Empires". For example under the Roman Empire, Egyptians were effectively slaves working on the corn and rice fields which bore crops three times a year. Nearly all of that crop was shipped back to Rome at essentially zero benefit to the Egyptians. Sure, at any given period you would find some local ruler who cooperated with the occupying empire, and who was rewarded with power, gold, property, palaces, slaves, ... He was probably as rich as any King in Europe was. But that did not make Egypt prosperous. Most Egyptians lived in dire poverty.
Posted on Feb 27, 2012 6:11:25 AM PST
Grant M says:
"Even if you exclude the oil rich tin-pot-little-countries, England still lags far behind Norway..."
Um, Norway is filthy rich in oil. They invest the bulk of their petroleum profits in a (huge) sovereign wealth fund, but the day-to-day benefits and general industrial spillovers certainly contributed towards their sustained economic development.
Posted on Feb 27, 2012 6:41:13 AM PST
Barry O'Toole says:
Before the British started controlling the Indian economy, in the 18th century, her share of world GDP was about 23%. When they left, 200 years later, it was less than 1%.
In reply to an earlier post on Feb 27, 2012 6:10:17 PM PST
Last edited by the author on Feb 27, 2012 6:11:25 PM PST
You have valid point about Norway. They are oil-rich. Not like Saudi Arabia, not even like Mexico, but oil-rich nevertheless. There are three mitigating points you should consider, however: (1) The sentence in the review reads "Even if you exclude the oil rich tin-pot-little-countries, England still lags far behind Norway, Switzerland, Sweden, Denmark, Netherlands, Germany, and yes, even the U.S." You took the liberty of cutting out the rest of the sentence which starts with Sweden. Neither Sweden, nor any of the other countries listed afterwards have any oil themselves, save for USA. In fact, Sweden is only 3% behind Norway in GDP without a single single drop of oil production. That still puts them way ahead of U.K. (2) It so happens that Norway does not own all of the North Sea Oil. In fact Norway is the second largest producer. Do you know which country produces more oil from the North Sea fields? U.K does! Did you know that? (3) The oil-rich fortunes of Norway and U.K both came about in the last 40 years. Before that, neither had any significant amount of oil production. But back in 1960, Norway was still way ahead of U.K in GDP without the oil riches.
Posted on Feb 28, 2012 10:49:02 AM PST
BTW, it's Nogales, Arizona, not New Mexico.. Welcome to a map.
In reply to an earlier post on Feb 28, 2012 5:13:01 PM PST
Thanks for the correction. I will accordingly edit and correct my review.
Posted on Mar 3, 2012 1:08:29 PM PST
Eric Zuesse says:
Physic Lover: thanks for a terrifically informative and well-thought-out review!
Posted on Mar 12, 2012 4:16:25 AM PDT
Last edited by the author on Mar 12, 2012 4:21:11 AM PDT
Z. Ni says:
You misunderstand the authors arguments. The US can provide better education because it has better institutions. Social/economic/political policies are function of the type of institution. If it's extractive, institutions will produce policies that benefit a few. If it's inclusive, policies will cater for the majority.
Here are some examples from the authors blog: